<PAGE>
RULE NO. 424(b)(2)
REGISTRATION NO. 333-27757
PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 23, 1997)
$3,000,000,000
LOGO
$500,000,000 6.30% NOTES DUE 2000
$1,000,000,000 6.45% NOTES DUE 2002
$1,000,000,000 6.75% NOTES DUE 2007
$500,000,000 7.20% DEBENTURES DUE 2027
---------------
Interest payable February 15 and August 15
---------------
THE 6.30% NOTES DUE 2000 (THE "NOTES DUE 2000") WILL MATURE ON AUGUST 15,
2000 AND WILL NOT BE REDEEMABLE PRIOR TO MATURITY. THE 6.45% NOTES DUE 2002
(THE "NOTES DUE 2002") WILL MATURE ON AUGUST 15, 2002 AND WILL NOT BE
REDEEMABLE PRIOR TO MATURITY. THE 6.75% NOTES DUE 2007 (THE "NOTES DUE
2007") WILL MATURE ON AUGUST 15, 2007. THE 7.20% DEBENTURES DUE 2027
(THE "DEBENTURES DUE 2027") WILL MATURE ON AUGUST 15, 2027. THE NOTES
DUE 2007 AND THE DEBENTURES DUE 2027 WILL BE REDEEMABLE AS A WHOLE
OR IN PART AT THE OPTION OF RAYTHEON AT ANY TIME, AT A REDEMPTION
PRICE EQUAL TO THE GREATER OF (I) 100% OF THE PRINCIPAL AMOUNT
OF SUCH NOTES OR DEBENTURES AND (II) THE SUM OF THE PRESENT
VALUES OF THE REMAINING SCHEDULED PAYMENTS OF PRINCIPAL AND
INTEREST THEREON DISCOUNTED TO THE DATE OF REDEMPTION ON A
SEMIANNUAL BASIS (ASSUMING A 360-DAY YEAR CONSISTING OF
TWELVE 30-DAY MONTHS) AT THE TREASURY RATE (AS DEFINED
HEREIN) PLUS 10 BASIS POINTS IN THE CASE OF THE NOTES
DUE 2007 OR 15 BASIS POINTS IN THE CASE OF THE
DEBENTURES DUE 2027, PLUS, IN EACH CASE, ACCRUED
INTEREST THEREON TO THE DATE OF REDEMPTION. THE
NOTES DUE 2000, THE NOTES DUE 2002, THE NOTES DUE
2007 AND THE DEBENTURES DUE 2027 (COLLECTIVELY,
THE "OFFERED SECURITIES") WILL NOT BE SUBJECT
TO ANY SINKING FUND. SEE "DESCRIPTION OF THE
OFFERED SECURITIES" HEREIN. THE OFFERED
SECURITIES EACH WILL BE REPRESENTED BY
BOOK-ENTRY SECURITIES (AS DEFINED
HEREIN) REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY ("DTC"), OR
ITS NOMINEE. INTERESTS IN SUCH BOOK-
ENTRY SECURITIES WILL BE SHOWN ON,
AND TRANSFERS THEREOF WILL BE
EFFECTED ONLY THROUGH, RECORDS
MAINTAINED BY DTC AND ITS
PARTICIPANTS. EXCEPT AS DESCRIBED
HEREIN, OFFERED SECURITIES IN
DEFINITIVE FORM WILL NOT BE ISSUED.
SEE "DESCRIPTION OF THE OFFERED
SECURITIES" HEREIN.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) RAYTHEON(1)(3)
------------ -------------- --------------
<S> <C> <C> <C>
Per Note Due 2000................... 99.891% .350% 99.541%
Total.............................. $499,455,000 $1,750,000 $497,705,000
Per Note Due 2002................... 99.860% .600% 99.260%
Total.............................. $998,600,000 $6,000,000 $992,600,000
Per Note Due 2007................... 99.755% .650% 99.105%
Total.............................. $997,550,000 $6,500,000 $991,050,000
Per Debenture Due 2027.............. 99.852% .875% 98.977%
Total.............................. $499,260,000 $4,375,000 $494,885,000
</TABLE>
- -------
(1) Plus accrued interest, if any, from August 12, 1997.
(2) Raytheon has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expenses estimated at $1,330,000, payable by Raytheon.
---------------
The Offered Securities are offered, subject to prior sale, when, as and if
accepted by the several Underwriters, and subject to approval of certain legal
matters by Cravath, Swaine & Moore, counsel for the Underwriters. It is
expected that delivery of the Offered Securities will be made on or about
August 12, 1997 at the office of Morgan Stanley & Co. Incorporated, New York,
New York, against payment in immediately available funds.
---------------
BEAR, STEARNS & CO. INC. CREDIT SUISSE FIRST BOSTON MORGAN STANLEY DEAN WITTER
---------------
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO. J.P. MORGAN & CO.
---------------
CHASE SECURITIES INC. LEHMAN BROTHERS SALOMON BROTHERS INC
---------------
<TABLE>
<S> <C>
ABN AMRO CHICAGO CORPORATION BANCAMERICA SECURITIES, INC.
BT SECURITIES CORPORATION CIBC WOOD GUNDY SECURITIES CORP.
CITICORP SECURITIES, INC. DEUTSCHE MORGAN GRENFELL
FIRST CHICAGO CAPITAL MARKETS, INC. SBC WARBURG INC.
SCOTIA CAPITAL MARKETS UBS SECURITIES
</TABLE>
August 7, 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
OFFERED HEREBY. SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION
WITH THE OFFERING, AND MAY BID FOR AND PURCHASE, THE OFFERED SECURITIES IN THE
OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
NO PERSON IS AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS OR ANY DEALER
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN SO AUTHORIZED. NEITHER
THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SECURITIES OFFERED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS OR ANY
SALE MADE HEREUNDER DOES NOT IMPLY THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE ON WHICH SUCH
INFORMATION IS GIVEN.
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Disclosure Regarding Forward-Looking Statements............................ S-1
The Company................................................................ S-2
TI Defense and Hughes Defense Transactions................................. S-4
Recent Financial Results................................................... S-6
Use of Proceeds............................................................ S-6
Capitalization............................................................. S-7
Ratio of Net Debt to Total Capitalization.................................. S-8
Ratio of Earnings to Fixed Charges......................................... S-8
Summary Pro Forma Financial Data........................................... S-9
Selected Summary Financial Data............................................ S-10
Description of the Offered Securities...................................... S-13
Certain United States Federal Income Tax Consequences...................... S-15
Underwriting............................................................... S-17
Notice to Canadian Residents............................................... S-18
Pro Forma Combined Condensed Financial Statements.......................... S-19
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
The Acquisition............................................................ 4
The Merger................................................................. 4
Use of Proceeds............................................................ 5
Ratio of Earnings to Fixed Charges......................................... 5
Description of Debt Securities............................................. 5
Description of Preferred Stock............................................. 13
Description of Common Stock................................................ 16
Description of Securities Warrants......................................... 18
Plan of Distribution....................................................... 19
Validity of Offered Securities............................................. 20
Experts.................................................................... 20
</TABLE>
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS SUPPLEMENT MAY INCLUDE "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF
THE SECURITIES EXCHANGE ACT OF 1934. ALL STATEMENTS OTHER THAN STATEMENTS OF
HISTORICAL FACTS INCLUDED IN THIS PROSPECTUS SUPPLEMENT, INCLUDING, WITHOUT
LIMITATION, CERTAIN STATEMENTS UNDER "THE COMPANY", "TI DEFENSE AND HUGHES
DEFENSE TRANSACTIONS" AND LOCATED ELSEWHERE HEREIN REGARDING THE COMPANY'S
FINANCIAL POSITION AND BUSINESS STRATEGY, MAY CONSTITUTE FORWARD-LOOKING
STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN
SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT
SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S
EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS
SUPPLEMENT AND THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN, INCLUDING
STATEMENTS UNDER "ITEM 1--BUSINESS" OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1996. ALL SUBSEQUENT FORWARD-LOOKING
STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE
EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
S-1
<PAGE>
THE COMPANY
Raytheon Company ("Raytheon" or the "Company") is an international high
technology company which operates in four businesses: defense and commercial
electronics (44% of 1996 net sales), engineering and construction (25% of 1996
net sales), aircraft (19% of 1996 net sales) and major appliances (12% of 1996
net sales). Historically, the Company's principal business has been the
design, manufacture and servicing of advanced electronic devices, equipment
and systems for government and commercial use. Raytheon is a major defense
contractor in the United States and internationally.
Raytheon's defense electronics business includes Raytheon Electronics
Systems, which is a major provider of ground-based air defense systems, air
intercept missiles, ground-based and shipboard radars, military communications
systems and naval combat control, sonar and minehunting systems. This business
segment also includes Raytheon E-Systems, which is a leader in defense systems
integration and provides reconnaissance and surveillance, command, control,
communications and intelligence systems, mass data collection, interpretation
and dissemination, specialized aircraft modification services and shipboard
and airborne countermeasures systems to a wide variety of customers worldwide.
On July 11, 1997, Raytheon consummated the Acquisition (as defined below) of
the defense systems and electronics business ("TI Defense") of Texas
Instruments Incorporated. In addition, Raytheon currently expects to
consummate the Merger (as defined below) of Raytheon with the defense
electronics business ("Hughes Defense") of Hughes Electronics Corporation
("HEC") in the fourth quarter of 1997, subject to the satisfaction of a number
of conditions.
Raytheon Engineers & Constructors is one of the largest engineering,
construction and operations and maintenance organizations in the world.
Raytheon Aircraft is a world leader in general aviation, offering one of the
broadest product lines in the industry. Raytheon's commercial electronics
business is, among other things, a market leader in marine electronics and
produces other electronic components for a wide range of applications,
including microelectronic components utilized in the communications industry.
Raytheon Appliances (the "Appliance Group") markets some of the finest brand
names in appliances, including Amana refrigerators, heating and air
conditioning equipment, microwave ovens, cooking surfaces and washer and
dryers, as well as Speed Queen, Huebsch and UniMac commercial laundry
equipment. On July 11, 1997, Raytheon entered into a definitive agreement to
sell three of the five businesses in the Appliance Group.
Raytheon's four strategic goals are to:
. STRENGTHEN ITS POSITION AS A MAJOR COMPETITOR IN THE DEFENSE INDUSTRY. As a
result of the increasing consolidation in the defense industry, Raytheon has
taken steps to strengthen its position as a major defense electronics
contractor. The acquisitions of E-Systems in 1995 and Chrysler Technologies
in 1996 have helped to broaden Raytheon's position in defense electronics,
which the Company believes to be one of the more attractive segments of the
overall defense industry. The combination of Raytheon with TI Defense and,
if the Merger is consummated, Hughes Defense will allow Raytheon to further
broaden its range of products and services and will generate additional
critical mass for Raytheon to continue to compete effectively within a
consolidating defense industry. Raytheon's current defense electronics
systems continue to be an integral part of many of the defense systems of
the United States and its allies around the world.
. EXPAND DEFENSE TECHNOLOGIES INTO COMMERCIAL MARKETS. Raytheon continues to
expand its defense technologies into commercial markets, including air
traffic control, communications, transportation, environmental monitoring
and microelectronics. Raytheon believes that technologies developed by both
TI Defense and Hughes Defense can be transferred to commercial applications
and used in combination with Raytheon's technologies.
. CONTINUE TO STRENGTHEN CORE COMMERCIAL BUSINESSES. Raytheon has taken
several initiatives in the past two years to strengthen its core commercial
businesses--engineering and construction, aircraft and commercial
electronics. Raytheon Engineers & Constructors acquired certain engineering
and construction assets of Litwin Engineers & Constructors, Inc. and Rust
International Inc., thereby expanding both geographically and by product
offerings. In addition, Raytheon Aircraft recently introduced two new
business jets, the Raytheon Premier I and the Hawker Horizon.
S-2
<PAGE>
. EXPAND GLOBAL BUSINESS. Raytheon believes that the international markets for
its products offer attractive growth opportunities. In 1996, 28% of
Raytheon's sales were to international customers (including foreign military
sales). Raytheon believes that its presence and experience in the
international marketplace will enable it to leverage growth opportunities
for both TI Defense and, if the Merger is consummated, Hughes Defense.
ELECTRONICS
Defense Electronics. Raytheon's defense electronics business consists of
Raytheon Electronics Systems and Raytheon E-Systems. These operations are
engaged in the design, manufacture and service of advanced electronic devices,
equipment and systems for both government and commercial customers. In
addition to defense electronics systems, Raytheon has been successful in the
conversion of certain defense electronics technologies to commercial
applications such as air traffic control, environmental monitoring and
communications.
In connection with the Acquisition and the Merger, Raytheon expects to
initiate consolidation activities in the Electronics segment shortly after
closing each transaction. Raytheon believes that it will reduce costs
significantly over the next few years by eliminating overlapping activities,
focusing research and development and bid and proposal expenditures, unifying
the purchase of materials and services and rationalizing facilities. Raytheon
plans to establish centers of excellence and manage the consolidated defense
businesses on a coordinated basis. Additionally, Raytheon expects revenue
growth from its combination with TI Defense and Hughes Defense through
enhanced systems integration and capabilities and improved technology.
Raytheon believes that there will be significant cash costs incurred in
consolidating the activities of TI Defense and, if the Merger is consummated,
Hughes Defense; however, the magnitude of these costs cannot be accurately
ascertained at this time.
Commercial Electronics. Raytheon's commercial electronics business consists
of Raytheon Marine Company, Raytheon Microelectronics, Raytheon Semiconductor,
Seiscor Technologies, Inc. and Switchcraft, Inc. These entities produce, among
other things, marine radars and other marine electronics, transmit/receive
modules for satellite communications projects, silicon semiconductor
components, telephone transmission, switching and connection equipment and
other electronic components for a wide range of applications.
ENGINEERING AND CONSTRUCTION
Raytheon Engineers & Constructors ("RE&C") is one of the largest
engineering, construction and operation and maintenance firms in the world,
supporting customers in 13 industries. RE&C is engaged in the design,
construction and maintenance of facilities and plants operated by a range of
customers, including independent power producers, utilities, petroleum
companies, pulp and paper companies, industrial concerns and governments.
Raytheon Service Company, a unit of RE&C, provides operations, maintenance and
technical services for many U.S. defense systems and agencies. Another unit of
RE&C designs and manufactures a wide range of equipment used for
infrastructure building and repair, including aggregate producing equipment,
asphalt paving equipment, mixing plants and soil remediation systems.
AIRCRAFT
Raytheon's Aircraft segment offers one of the broadest product lines in the
general aviation market. Raytheon Aircraft manufactures, markets and supports
piston-powered aircraft, jet props and light and medium jets for the world's
commercial, regional airline and military aircraft markets. Raytheon Aircraft
is the prime contractor for the U.S. Air Force/U.S. Navy Joint Primary
Aircraft Training System (JPATS).
APPLIANCES
The Appliance Group manufactures and sells household and commercial
appliances, including refrigerators, gas and electric ranges, cooktops, wall
and microwave ovens, home and commercial laundry equipment and heating and air
conditioning equipment. On July 11, 1997, Raytheon entered into a definitive
agreement to sell its home appliance, heating and air conditioning and
commercial cooking businesses to Goodman Manufacturing
S-3
<PAGE>
Company, L.P. for an aggregate amount of $550 million in cash, subject to
adjustment for certain changes in the net working capital of the businesses to
be sold between December 31, 1996 and the closing date of the transaction,
which is expected to occur in the third quarter of 1997. In 1996, these three
businesses represented approximately 80% of the sales and 50% of the operating
income of the Appliance Group. In addition, Raytheon has realized
approximately $200 million from the sale of receivables relating to the
businesses to be sold. The Company is retaining the commercial laundry and
electronics controls businesses of the Appliance Group, but is continuing the
strategic review of these remaining businesses announced in February 1997.
Proceeds from the sale of the three Appliance Group businesses will be used to
reduce debt incurred in connection with the Acquisition.
TI DEFENSE AND HUGHES DEFENSE TRANSACTIONS
ACQUISITION OF TI DEFENSE
On July 11, 1997, the Company consummated the acquisition of TI Defense,
pursuant to which the Company purchased substantially all the assets of, and
assumed substantially all the liabilities related to, TI Defense (the
"Acquisition") for an aggregate amount of $2.875 billion in cash, subject to
post-closing adjustments for certain changes in the net assets of TI Defense
between September 30, 1996 and the closing date of the Acquisition. In
addition, the Company paid $75 million for an assignment and license of
certain related intellectual property. TI Defense had 1996 sales of
approximately $1.8 billion. Because the Acquisition involved the purchase of
assets, a significant portion of the goodwill created by the Acquisition will
be deductible for tax purposes.
In connection with the Acquisition and in contemplation of the Merger, the
Company has arranged revolving credit facilities with a syndicate of banks
totaling $7.0 billion, $4.0 billion of which has a maturity of 5 years and
$3.0 billion of which has a maturity of 364 days (collectively, the "Raytheon
Facilities"). Raytheon incurred indebtedness in the amount of $2.950 billion
under the Raytheon Facilities in order to finance the Acquisition. The
Raytheon Facilities include covenants which require (1) repayment and
reduction of the outstanding commitment of such facilities or similar
facilities with 75% of the net cash proceeds from any capital markets
financings and asset sales for a period of two years from the closing date and
(2) the ratio of total debt to total capitalization not to exceed 65% until
July 2, 2000, 60% from July 2, 2000 to January 1, 2002 and 55% thereafter. The
Raytheon Facilities rank pari passu with the Hughes Facilities (as defined
below) and will rank pari passu with other senior unsecured indebtedness of
Raytheon and Hughes (as defined below) and the Offered Securities.
TI Defense is a premier supplier of advanced defense systems, including
tactical missiles, precision-guided weapons, radar, night vision systems and
electronic warfare systems. Examples of TI Defense's major systems include:
. Precision-guided weapons, such as the Paveway laser-guided weapon
program; the Joint Stand-Off Weapon (JSOW), which is a U.S. Navy/U.S. Air
Force system for attacking high-value ground targets; and the Javelin
program, which is an anti-tank system for the U.S. Army.
. Long Range Precision Strike programs, such as the High-Speed Anti-
Radiation Missile (HARM). HARM, along with Paveway, constituted 65% of the
air-delivered weapons used by Coalition Forces in Operation Desert Storm.
. Radar and surveillance systems, such as P-3 and S-3 ocean surveillance,
F-22 airborne radars and the LANTIRN terrain-following radar.
. Electro-optics, particularly with Forward-Looking InfraRed (FLIR)
sensors, deployed on platforms such as the M-1 Tank, Bradley Fighting
Vehicle, F-117 "Stealth" fighter and the F-18 Hornet.
THE RAYTHEON-HUGHES MERGER
On January 16, 1997, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with HE Holdings, Inc. ("Hughes"), a Delaware
corporation and an indirect, wholly owned subsidiary of General Motors
Corporation, a Delaware corporation ("GM"), pursuant to which Raytheon agreed
to merge with and into Hughes (the "Merger"). The combined company is to be
named Raytheon Company. The Merger places a notional value on Hughes Defense
of approximately $9.5 billion, including debt to be assumed by the merged
company, as described below.
S-4
<PAGE>
As a condition to entering into the Merger Agreement, Raytheon required that
Hughes be, immediately prior to the consummation of the Merger, an independent
publicly owned company, comprising Hughes Defense. In order to separate Hughes
Defense from the other businesses conducted by HEC, GM agreed to consummate a
number of internal transactions required to reallocate the assets and
liabilities of the various businesses. As part of this process, Hughes will
also effect a borrowing, substantially all the proceeds of which will be made
available to other businesses of HEC, as described below.
Prior to the Merger, GM will effect a spin-off of Hughes to the holders of
GM's $1 2/3 and Class H common stocks in a transaction intended to be tax-free
to Hughes, GM and such holders. In connection with the spin-off and subsequent
Merger, two classes of common stock will be created: Class A common stock, to
be received by GM's $1 2/3 and Class H stockholders in the spin-off, and Class
B common stock, to be received by Raytheon's stockholders in the Merger. The
Class A common stock will represent approximately 30% of the equity of the
combined company, and the Class B common stock will represent the remaining
approximately 70% of the equity.
GM has received a ruling from the Internal Revenue Service relating to
certain federal income tax consequences of the transaction described above,
the continuing validity of which is a condition to the Merger. In addition,
the Merger and related transactions are subject, among other things, to
approval by Raytheon's stockholders, certain regulatory approvals (including
federal antitrust review) and approval by the holders of GM's $1 2/3 and Class
H common stocks. There can be no assurance, therefore, that the Merger will be
consummated.
The Merger Agreement provides that Hughes' total debt as of the time of the
Merger will be adjusted to reflect the market price of Raytheon's common
stock, subject to specified limits. The Company has agreed that, prior to the
Merger, Hughes may borrow as much as $4.9 billion. Substantially all the
amount borrowed will be contributed by Hughes to a subsidiary of Hughes, the
stock of which will then be distributed to GM. Accordingly, the proceeds of
such loan will not be assets of Hughes as of the time of the Merger, but the
obligation to repay such loans will remain an obligation of the combined
company following the Merger. The actual amount to be borrowed will be
determined by subtracting from $9.5 billion any other outstanding debt of
Hughes as of the Effective Time (as defined in the Merger Agreement) and the
product of (x) the number of shares of Class A common stock to be issued to
GM's $1 2/3 and Class H common stockholders (102,630,503 shares) and (y) the
average closing market price of Raytheon's common stock during the 30-day
period ending on the fifth day prior to consummation of the Merger; provided
that in the event such average price is less than $44.42, it will be deemed to
be $44.42, and in the event such price is more than $54.29, it shall be deemed
to be $54.29. Based upon the midpoint of this range, approximately $5.1
billion in common stock would be issued to the Class A stockholders. The
balance of the $9.5 billion transaction value would then consist of
approximately $4.4 billion in Hughes' debt. The amount of Hughes' debt
actually assumed will vary inversely with changes in the average stock price
of Raytheon's common stock during the measurement period, within the range of
$3.9 billion to $4.9 billion.
In connection with the Merger, Hughes has arranged revolving credit
facilities with a syndicate of banks totaling $5.0 billion, $3.0 billion of
which has a maturity of 5 years and $2.0 billion of which has a maturity of
364 days (collectively, the "Hughes Facilities"). The Hughes Facilities
contain certain covenants identical to those in the Raytheon Facilities.
Hughes is a major supplier of advanced defense electronics systems and
services, principally in naval systems, airborne and ground-based radars,
ground-, air- and ship-launched missiles, tactical communications, electro-
optical systems, complex information systems and training systems and
services.
. In naval systems, Hughes' programs include the MK48 ADCAP torpedo, the
Phalanx Close-in Weapon System, UYQ-21 displays and Airborne Low-Frequency
sonars. Hughes has also recently been selected to provide state-of-the-art
ship combat systems for the U.S. Navy's new LPD-17 assault landing ship.
. In radar systems, Hughes provides the APG-series of airborne fire control
radars of the F-15, F-18 and AV-8B Harrier. Ground-based radar programs
include the TPQ-37 fire direction radar and the Ground Based Sensor.
S-5
<PAGE>
. In military laser and infrared electro-optics, Hughes produces systems
for combat vehicles such as the M-1 Tank and Bradley Fighting Vehicle and
for a variety of helicopters and high performance aircraft.
. In missile systems, Hughes' programs include Maverick, TOW (Tube-
launched, Optically-tracked, Wire-guided missile), MEADS, Tomahawk,
Stinger, RAM (Rolling Air Frame Missile), AMRAAM (Advanced Medium-Range
Air-to-Air Missile), Sparrow, Evolved SeaSparrow, Standard (as part of
Standard Missile Company, a jointly owned Raytheon-Hughes subsidiary) and
the new AIM-9X Sidewinder.
. In tactical communications and military radios, Hughes' programs include
the U.S. Army's Tactical Command and Control System, Advanced Field
Artillery Tactical Data Systems (AFATADS) and a wide array of tactical
radios.
. Hughes provides air traffic control systems to the U.S. Federal Aviation
Administration and to foreign governments and is active in the field of
global positioning systems.
. Hughes also provides trainers and simulators for helicopter and fixed-
wing aircraft, as well as engineering and technical services to federal
agencies.
RECENT FINANCIAL RESULTS
On July 15, 1997, Raytheon announced its financial results for the quarter
ended June 29, 1997. Earnings were $209.5 million for the quarter ended June
29, 1997 as compared to $209.4 million for the quarter ended June 30, 1996.
Net sales increased 6.3% to $3.325 billion for the quarter ended June 29, 1997
from $3.127 billion for the quarter ended June 30, 1996. This information
should be read in conjunction with the information relating to Raytheon in
"Selected Summary Financial Data" included elsewhere in this Prospectus
Supplement. These financial data are not audited and are not necessarily
indicative of the results that may be expected for future periods.
On July 15, 1997, HEC announced its financial results for the quarter ended
June 30, 1997. Earnings for Hughes Defense were $67.0 million for the quarter
ended June 30, 1997 compared to $61.9 million for the quarter ended June 30,
1996. Sales for Hughes Defense increased 14% to $1.739 billion for the quarter
ended June 30, 1997 from $1.526 billion for the quarter ended June 30, 1996.
This information should be read in conjunction with the information relating
to Hughes Defense in "Selected Summary Financial Data" included elsewhere in
this Prospectus Supplement. These financial data are not audited and are not
necessarily indicative of the results that may be expected for future periods.
On July 15, 1997, Texas Instruments Incorporated announced its financial
results for the quarter ended June 30, 1997, which included results for TI
Defense. Earnings for TI Defense were $25.4 million for the quarter ended June
30, 1997 compared to $34.5 million for the quarter ended June 30, 1996. Sales
for TI Defense declined 6.6% to $424 million for the quarter ended June 30,
1997 from $454 million for the quarter ended June 30, 1996. This information
should be read in conjunction with the information relating to TI Defense in
"Selected Summary Financial Data" included elsewhere in this Prospectus
Supplement. These financial data are not audited and are not necessarily
indicative of the results that may be expected for future periods.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Securities (the "Offering")
will be used by Raytheon primarily to reduce amounts outstanding under the
Raytheon Facilities or to refinance other debt incurred to finance the
Acquisition, including commercial paper borrowings. Any remaining proceeds
will be used by Raytheon for capital expenditures, working capital
requirements and general corporate purposes.
S-6
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Raytheon (a) as of
March 30, 1997, (b) pro forma after giving effect to the Acquisition, as if it
had occurred on March 30, 1997, and to the Offering and the application of the
proceeds thereof (without deduction for expenses) as described under "Use of
Proceeds," and (c) pro forma after giving effect to the Acquisition and the
Merger, as if each had occurred on March 30, 1997, and to the Offering and the
application of the proceeds thereof (without deduction for expenses) as
described under "Use of Proceeds." This table should be read in conjunction
with the Pro Forma Combined Condensed Financial Statements included elsewhere
in this Prospectus Supplement and the historical audited financial statements
of Raytheon, TI Defense and Hughes Defense, including the notes thereto, which
are incorporated by reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 30, 1997
------------------------------------------
PRO FORMA FOR THE
PRO FORMA FOR THE ACQUISITION, THE
ACQUISITION AND MERGER AND THE
ACTUAL THE OFFERING OFFERING(A)
------ ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Notes payable and current
portion of long-term debt.. $2,403 $ 2,393 $ 5,553
Long-term debt
Offered Securities......... -- 3,000 3,000
Other long-term debt....... 1,499 1,499 2,910
------ ------- -------
Total long-term debt.... 1,499 4,499 5,910
Stockholders' equity........ 4,717 4,717 9,782
------ ------- -------
Total capitalization.. $8,619 $11,609 $21,245
====== ======= =======
</TABLE>
- --------
(a) Based on Hughes' debt calculated assuming the midpoint of the range
described in "TI Defense and Hughes Defense Transactions--The Raytheon-
Hughes Merger."
S-7
<PAGE>
RATIO OF NET DEBT TO TOTAL CAPITALIZATION
The following table sets forth the Company's consolidated ratio of net debt
to total capitalization (a) on a pro forma basis as of March 30, 1997 after
giving effect to the Acquisition, (b) on a pro forma basis as of March 30,
1997 after giving effect to the Acquisition and the Merger and (c) on an
historical basis at March 30, 1997 and at the end of fiscal years 1996, 1995,
1994, 1993 and 1992:
<TABLE>
<CAPTION>
PRO FORMA
MARCH 30, 1997 HISTORICAL
--------------------------------- ---------------------------------------
DECEMBER 31,
-----------------------------
RAYTHEON- RAYTHEON-TI DEFENSE- MARCH 30,
TI DEFENSE HUGHES DEFENSE 1997 1996 1995 1994 1993 1992
---------- -------------------- --------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
58.9% 53.7% 44.4% 43.8% 36.8% 17.9% 14.1% 14.3%
</TABLE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratio of earnings
to fixed charges (a) on a pro forma basis as of March 30, 1997 after giving
effect to the Acquisition, (b) on a pro forma basis as of March 30, 1997 after
giving effect to the Acquisition and the Merger and (c) on an historical basis
at March 30, 1997 and at the end of fiscal years 1996, 1995, 1994, 1993 and
1992:
<TABLE>
<CAPTION>
PRO FORMA
MARCH 30, 1997 HISTORICAL
--------------------------------- -------------------------------------
DECEMBER 31,
---------------------------
RAYTHEON- RAYTHEON-TI DEFENSE- MARCH 30,
TI DEFENSE HUGHES DEFENSE 1997 1996 1995 1994 1993 1992
---------- -------------------- --------- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
3.0x 2.6x 4.4x 4.6x 6.0x 12.0x 18.1x 11.9x
</TABLE>
For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of net earnings, taxes on income and fixed charges (less capitalized
interest) and fixed charges consist of interest expense, amortization of debt
discount and expense, the portion of rents representative of an interest
factor and capitalized interest.
S-8
<PAGE>
SUMMARY PRO FORMA FINANCIAL DATA
The following tables set forth a summary of the unaudited pro forma
financial data of Raytheon, which data were derived from the Pro Forma
Combined Condensed Financial Statements and the notes thereto included
elsewhere in this Prospectus Supplement. The pro forma statement of earnings
data give effect to the Acquisition and the Merger as if each had occurred on
January 1, 1996. The pro forma balance sheet data give effect to the
Acquisition and the Merger as if each had occurred on March 30, 1997. The
information below should be read in conjunction with the Pro Forma Combined
Condensed Financial Statements and the notes thereto included elsewhere in
this Prospectus Supplement. The pro forma financial data are not necessarily
indicative of what the Company's actual financial position or results of
operations would have been if the transactions had occurred on the applicable
date indicated. Moreover, they are not intended to be indicative of future
results of operations or financial position.
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA COMBINED
PRO FORMA COMBINED RAYTHEON-TI
RAYTHEON-TI DEFENSE-HUGHES
RAYTHEON DEFENSE DEFENSE
-------- ------------------ ------------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net sales(a).................. $12,331 $14,131 $20,514
Operating income.............. 1,198 1,377 2,006
Income before tax............. 1,084 1,062 1,400
Net income(a)................. 762 743 901
</TABLE>
FOR THE THREE MONTHS ENDED MARCH 30, 1997
<TABLE>
<CAPTION>
PRO FORMA COMBINED
PRO FORMA COMBINED RAYTHEON-TI
RAYTHEON-TI DEFENSE-HUGHES
RAYTHEON DEFENSE DEFENSE
-------- ------------------ ------------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net sales(a)................. $ 2,899 $ 3,299 $ 4,973
Operating income............. 339 377 538
Income before tax............ 278 265 356
Net income(a)................ 183 173 216
BALANCE SHEET DATA (END OF
PERIOD):
Total assets................. $11,496 $15,018 $27,974
Total debt................... 3,902 6,892 11,463
Stockholders' equity......... 4,717 4,717 9,782
</TABLE>
- --------
(a) The pro forma sales and net income exclude merger synergies referred to
on page S-3.
S-9
<PAGE>
SELECTED SUMMARY FINANCIAL DATA
The following tables present selected financial data for Raytheon, TI
Defense and Hughes Defense. The March 30, 1997 data have been derived from the
books and records of each company and are unaudited. The fiscal year-end
financial data have been derived from and are qualified by reference to the
audited financial statements of Raytheon, TI Defense and Hughes Defense and
should be read in conjunction with such financial statements and notes
thereto. The audited historical financial data concerning Raytheon are derived
from Raytheon's audited consolidated financial statements filed as part of the
Company's Annual Report on Form 10-K for the year ended December 31, 1996,
which is incorporated herein by reference. The data for TI Defense and Hughes
Defense are derived from the audited financial statements for TI Defense and
Hughes Defense filed as part of the Company's Current Report on Form 8-K dated
May 23, 1997, which is incorporated herein by reference.
RAYTHEON
<TABLE>
<CAPTION>
THREE MONTHS FISCAL YEAR ENDED
ENDED DECEMBER 31,
MARCH 30, -------------------------
1997 1996 1995 1994
------------ ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales................... $2,899 $12,331 $11,804 $10,098
Operating income............ 339 1,198 1,118 896
Interest expense............ (69) (256) (197) (49)
Net income.................. 183 762 793 597
OTHER DATA:
EBITDA(a)................... $ 436 $ 1,607 $ 1,733 $ 1,233
Depreciation and
amortization............... 94 369 371 304
Capital expenditures ....... 108 406 329 267
<CAPTION>
AS OF AS OF DECEMBER 31,
MARCH 30, -------------------------
1997 1996 1995 1994
------------ ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net working capital......... $ 979 $ 912 $ 1,585 $ 1,702
Total assets................ 11,496 11,126 9,841 7,395
Notes payable and current
portion of long-term debt.. 2,403 2,227 1,216 1,033
Long-term debt and capital-
ized leases................ 1,499 1,501 1,488 25
Stockholders' equity........ 4,717 4,598 4,292 3,928
</TABLE>
- --------
(a) EBITDA represents income before interest, income taxes, depreciation
(including certain amounts allocated to corporate overhead that are included
in general and administrative expenses) and amortization. EBITDA is not
intended to represent cash flow or any other measure of performance reported
in accordance with generally accepted accounting principles. The Company has
included EBITDA as it understands that EBITDA is used by certain investors
as one measure of a company's ability to service debt.
S-10
<PAGE>
TI DEFENSE
<TABLE>
<CAPTION>
THREE MONTHS FISCAL YEAR ENDED
ENDED DECEMBER 31,
MARCH 30, ---------------------
1997 1996 1995 1994
------------ ------ ------ -------
(IN MILLIONS)
<S> <C> <C> <C> <C>
OPERATING DATA:
Net sales............................ $400 $1,800 $1,739 $1,725
Operating income..................... 45 178 155 157
Interest expense..................... -- -- -- --
Net income........................... 27 109 92 99
OTHER DATA:
EBITDA............................... $ 67 $ 262 $ 226 $ 241
Depreciation and amortization........ 23 87 77 86
Capital expenditures................. 10 80 89 56
<CAPTION>
AS OF AS OF DECEMBER 31,
MARCH 30, ---------------------
1997 1996 1995 1994(a)
------------ ------ ------ -------
(IN MILLIONS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net working capital.................. $230 $ 220 $ 96 $ --
Total assets......................... 857 837 737 --
Notes payable and current portion of
long-term debt...................... -- -- -- --
Long-term debt and capitalized
leases.............................. -- -- -- --
Stockholders' equity................. 403 384 278 --
</TABLE>
--------
(a) Not available.
S-11
<PAGE>
HUGHES DEFENSE
<TABLE>
<CAPTION>
THREE MONTHS FISCAL YEAR ENDED
ENDED DECEMBER 31,
MARCH 30, ---------------------
1997 1996 1995 1994
------------ ------ ------ -------
(IN MILLIONS)
<S> <C> <C> <C> <C>
OPERATING DATA:
Net sales............................ $1,675 $6,383 $5,922 $5,896
Operating income..................... 154 603 587 545
Interest expense..................... 26 92 76 65
Net income........................... 72 281 319 269
OTHER DATA:
EBITDA............................... $ 220 $ 859 $ 870 $ 833
Depreciation and amortization........ 61 247 241 266
Capital expenditures................. 30 178 99 174
<CAPTION>
AS OF AS OF DECEMBER 31,
MARCH 30, ---------------------
1997 1996 1995 1994(a)
------------ ------ ------ -------
(IN MILLIONS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net working capital.................. $1,472 $1,019 $ 920 $ --
Total assets......................... 7,356 7,028 7,026 --
Notes payable and current portion of
long-term debt...................... 100 94 84 --
Long-term debt and capitalized
leases.............................. 31 34 50 --
Stockholders' equity................. 5,352 4,823 4,680 --
</TABLE>
--------
(a) Not available.
S-12
<PAGE>
DESCRIPTION OF THE OFFERED SECURITIES
General. The Offered Securities will be limited to $3,000,000,000 aggregate
principal amount, consisting of $500,000,000 principal amount of Notes Due
2000, $1,000,000,000 principal amount of Notes Due 2002, $1,000,000,000
principal amount of Notes Due 2007 and $500,000,000 principal amount of
Debentures Due 2027. The Offered Securities are Senior Debt Securities as
described in the accompanying Prospectus.
The Notes Due 2000. Each Note Due 2000 will bear interest at the applicable
rate per annum stated on the cover page of this Prospectus Supplement, payable
semiannually on February 15 and August 15 of each year, commencing February
15, 1998, to the person in whose name the Note Due 2000 is registered, subject
to certain exceptions as provided in the Senior Indenture (as defined in the
accompanying Prospectus), at the close of business on February 1 or August 1
(each a "Record Date"), as the case may be, immediately preceding such
February 15 or August 15. The Notes Due 2000 will mature on August 15, 2000.
The Notes Due 2000 are not redeemable prior to maturity and are not subject to
any sinking fund provision.
The Notes Due 2002. Each Note Due 2002 will bear interest at the applicable
rate per annum stated on the cover page of this Prospectus Supplement, payable
semiannually on February 15 and August 15 of each year, commencing February
15, 1998, to the person in whose name the Note Due 2002 is registered, subject
to certain exceptions as provided in the Senior Indenture, at the close of
business on February 1 or August 1 (each a "Record Date"), as the case may be,
immediately preceding such February 15 or August 15. The Notes Due 2002 will
mature on August 15, 2002. The Notes Due 2002 are not redeemable prior to
maturity and are not subject to any sinking fund provision.
The Notes Due 2007. Each Note Due 2007 will bear interest at the applicable
rate per annum stated on the cover page of this Prospectus Supplement, payable
semiannually on February 15 and August 15 of each year, commencing February
15, 1998, to the person in whose name the Note Due 2007 is registered, subject
to certain exceptions as provided in the Senior Indenture, at the close of
business on February 1 or August 1 (each a "Record Date"), as the case may be,
immediately preceding such February 15 or August 15. The Notes Due 2007 will
mature on August 15, 2007 and are not subject to any sinking fund provision.
The Debentures Due 2027. Each Debenture Due 2027 will bear interest at the
applicable rate per annum stated on the cover page of this Prospectus
Supplement, payable semiannually on February 15 and August 15 of each year,
commencing February 15, 1998, to the person in whose name the Debenture Due
2027 is registered, subject to certain exceptions as provided in the Senior
Indenture, at the close of business on February 1 or August 1 (each a "Record
Date"), as the case may be, immediately preceding such February 15 or
August 15. The Debentures Due 2027 will mature on August 15, 2027 and are not
subject to any sinking fund provision.
The Notes Due 2007 and the Debentures Due 2027 will be redeemable as a whole
at any time or in part from time to time, at the option of the Company, at a
redemption price equal to the greater of (i) 100% of the principal amount of
such Notes or Debentures as the case may be, and (ii) the sum of the present
values of the remaining payments of principal and interest thereon from the
redemption date to the applicable maturity date discounted, in each case, to
the redemption date on a semiannual basis (assuming a 360-day year consisting
of twelve 30-day months) at the Treasury Rate plus 10 basis points in the case
of the Notes Due 2007 or 15 basis points in the case of the Debentures Due
2027, plus, in each case, accrued interest thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury
Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term of the Notes or Debentures, as the case may be, to be
redeemed that would be utilized, at the time of selection and in accordance
with customary
S-13
<PAGE>
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of such Notes or Debentures, as the
case may be. "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Trustee after consultation with the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor release)
is not published or does not contain such prices on such business day, the
average of the Reference Treasury Dealer Quotations actually obtained by the
Trustee for such redemption date. "Reference Treasury Dealer Quotations"
means, with respect to each Reference Treasury Dealer and any redemption date,
the average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m. on the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of Bear, Stearns & Co. Inc., Credit
Suisse First Boston Corporation and Morgan Stanley & Co. Incorporated, and
their respective successors; provided, however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer.
Notice of any redemption will be mailed at least 30 days but no more than 60
days before the redemption date to each holder of Offered Securities to be
redeemed.
Unless the Company defaults in payment of the redemption price, on and after
the redemption date interest will cease to accrue on the Offered Securities or
portions thereof called for redemption.
Defeasance. Under certain circumstances, Raytheon will be deemed to have
discharged the entire indebtedness on all the outstanding Offered Securities
by defeasance, or to be discharged from certain covenants otherwise applicable
to the Offered Securities and described in the accompanying Prospectus under
the heading "Description of Debt Securities--Certain Covenants of the
Corporation." See "Description of Debt Securities--Defeasance and Covenant
Defeasance" in the accompanying Prospectus for a description of the terms of
any such defeasance. Raytheon has made these defeasance provisions applicable
to the Offered Securities.
Book-Entry System. The Offered Securities will each initially be represented
by book-entry securities (each a "Book-Entry Security") deposited with DTC and
registered in the name of a nominee of DTC, except as set forth below. The
settlement of transactions with respect to each Book-Entry Security will be
facilitated through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the physical movement of
certificates representing Offered Securities. The Offered Securities will be
available for purchase in denominations of $1,000 and integral multiples
thereof in book-entry form only. Unless and until certificated securities are
issued under the limited circumstances described below, no beneficial owner of
an Offered Security shall be entitled to receive a definitive certificate
representing an Offered Security. So long as DTC or any successor depositary
(the "Depositary") or its nominee is the registered owner of a Book-Entry
Security, the Depositary or such nominee, as the case may be, will be
considered to be the sole owner or holder of the Offered Securities
represented thereby for all purposes of the Indenture. Unless and until it is
exchanged in whole or in part for the Offered Securities represented thereby,
a Book-Entry Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee to a successor
depositary or any nominee of such successor.
So long as Offered Securities are represented by a Book-Entry Security, all
payments of principal and interest with respect thereto will be made to the
Depositary or its nominee (or a successor), as the case may be, as the sole
registered owner of the Book-Entry Security representing such Offered
Securities.
S-14
<PAGE>
Raytheon expects that the Depositary or its nominee, upon receipt of any
payment of principal or interest in respect of a Book-Entry Security
representing Offered Securities, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Book-Entry Security as shown on the records of
the Depositary or such nominee.
If DTC at any time is unwilling, unable or ineligible to continue as
Depositary for a Book-Entry Security or in the event there shall have occurred
and be continuing an Event of Default, or an event which with notice or lapse
of time or both would become an Event of Default, with respect to the Offered
Securities represented by such Book-Entry Security, Raytheon will issue
certificated Offered Securities in definitive form in exchange for such Book-
Entry Security. In addition, Raytheon may at any time determine not to have
the Offered Securities represented by a Book-Entry Security, and, in such
event, will issue certificated Offered Securities in definitive form in
exchange for such Book-Entry Security. In either instance, an owner of a
beneficial interest in a Book-Entry Security will be entitled to physical
delivery of certificated Offered Securities in definitive form equal in
principal amount to such beneficial interest in such Book-Entry Security and
to have such certificated Offered Securities registered in its name.
Certificated Offered Securities so issued in definitive form will be issued in
denominations of $1,000 and integral multiples thereof and will be issued in
registered form only, without coupons.
See "Description of Debt Securities" in the accompanying Prospectus for
additional information concerning the Offered Securities and the Senior
Indenture.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
NON-U.S. HOLDERS
The following summary describes certain United States federal income tax
consequences under current law that may be relevant to a beneficial owner of
the Offered Securities that is not (i) a citizen or resident of the United
States, (ii) a corporation created or organized under the laws of the United
States or any State thereof or the District of Columbia or (iii) a person
otherwise subject to United States federal income taxation on its worldwide
income (any of the foregoing, a "Non-U.S. Holder"). This summary addresses
only issues concerning Non-U.S. Holders that are initial holders of the
Offered Securities and that will hold the Offered Securities as capital
assets. It does not address the tax considerations applicable to Non-U.S.
Holders if income or gain in respect of the Offered Securities is effectively
connected with the conduct of a trade or business in the United States.
Generally, payments of interest made with respect to the Offered Securities
to a Non-U.S. Holder will not be subject to United States federal income or
withholding tax, provided that (i) the Non-U.S. Holder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (ii) the Non-U.S. Holder is
not a controlled foreign corporation for United States tax purposes that is
directly or indirectly related to the Company through stock ownership and
(iii) the Non-U.S. Holder complies with applicable certification requirements.
Any capital gain realized on the sale, exchange, retirement or other
disposition of an Offered Security by a Non-U.S. Holder will not be subject to
United States federal income or withholding taxes unless such Non-U.S. Holder
is an individual who is present in the United States for a period or periods
aggregating 183 days or more in the taxable year of such sale, exchange,
retirement or other disposition and either has a "tax home" (as defined for
United States federal income tax purposes) in the United States or an office
or other fixed place of business in the United States to which the sale or
disposition is attributable.
The Offered Securities will not be includible in the estate of a Non-U.S.
Holder provided the Non-U.S. Holder does not actually or constructively own
10% or more of the total combined voting power of all classes of stock of the
Company entitled to vote.
S-15
<PAGE>
PURCHASERS OF OFFERED SECURITIES SHOULD CONSULT THEIR OWN TAX ADVISERS WITH
RESPECT TO THE POSSIBLE APPLICABILITY OF UNITED STATES FEDERAL INCOME,
WITHHOLDING AND OTHER TAXES UPON INCOME AND GAIN REALIZED IN RESPECT OF THE
OFFERED SECURITIES.
INFORMATION REPORTING AND BACKUP WITHHOLDING
A holder of the Offered Securities may be subject to information reporting
and backup withholding at a rate of 31% on certain amounts paid to the holder
unless such holder provides proof of an applicable exemption (including a
general exemption for Non-U.S. Holders and for corporations) or correct
taxpayer identification number, and otherwise complies with applicable
requirements of the information reporting and backup withholding rules. Any
amount withheld under the backup withholding rules may be allowed as a refund
or a credit against such holder's United States federal income tax liability,
provided that the required information is furnished to the Internal Revenue
Service.
PROPOSED REGULATIONS
On April 22, 1996, the United States Treasury Department published proposed
regulations relating to withholding, backup withholding and information
reporting that, if adopted in their current form, would, among other things,
unify current certification procedures and forms and clarify certain reliance
standards. The regulations are proposed to be effective for payments made
after December 31, 1997 but provide that certificates issued on or before the
date that is 60 days after the proposed regulations are published in final
form will continue to be valid until such certificates expire. The proposed
regulations, however, are subject to change prior to their publication in
final form.
S-16
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions in an Underwriting Agreement
dated the date hereof (the "Underwriting Agreement"), the Underwriters named
below (for whom Morgan Stanley & Co. Incorporated is acting as sole book
runner for the Offered Securities) have severally agreed to purchase, and the
Company has agreed to sell to them, severally, the respective principal
amounts of Offered Securities set forth opposite their names:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF NOTES DUE 2000 OF NOTES DUE 2002 OF NOTES DUE 2007 OF DEBENTURES DUE 2027
----------- ----------------- ----------------- ----------------- ----------------------
<S> <C> <C> <C> <C>
Bear, Stearns & Co.
Inc. .................. $88,350,000 $ 176,700,000 $ 176,700,000 $ 88,350,000
Credit Suisse First
Boston Corporation..... 88,350,000 176,700,000 176,700,000 88,350,000
Morgan Stanley & Co.
Incorporated........... 88,350,000 176,700,000 176,700,000 88,350,000
Goldman, Sachs & Co. ... 40,000,000 80,000,000 80,000,000 40,000,000
Merrill Lynch, Pierce,
Fenner & Smith
Incorporated... 40,000,000 80,000,000 80,000,000 40,000,000
J.P. Morgan Securities
Inc. .................. 40,000,000 80,000,000 80,000,000 40,000,000
Chase Securities Inc. .. 20,000,000 40,000,000 40,000,000 20,000,000
Lehman Brothers Inc. ... 20,000,000 40,000,000 40,000,000 20,000,000
Salomon Brothers Inc.... 20,000,000 40,000,000 40,000,000 20,000,000
ABN AMRO Chicago
Corporation ........... 5,000,000 10,000,000 10,000,000 5,000,000
BancAmerica Securities,
Inc. .................. 5,000,000 10,000,000 10,000,000 5,000,000
BT Securities
Corporation............ 5,000,000 10,000,000 10,000,000 5,000,000
CIBC Wood Gundy
Securities Corp. ...... 5,000,000 10,000,000 10,000,000 5,000,000
Citicorp Securities,
Inc. .................. 5,000,000 10,000,000 10,000,000 5,000,000
Deutsche Morgan Grenfell
Inc. .................. 5,000,000 10,000,000 10,000,000 5,000,000
First Chicago Capital
Markets, Inc. ......... 5,000,000 10,000,000 10,000,000 5,000,000
SBC Warburg Inc. ....... 5,000,000 10,000,000 10,000,000 5,000,000
Scotia Capital Markets
(USA) Inc. ............ 5,000,000 10,000,000 10,000,000 5,000,000
UBS Securities LLC...... 5,000,000 10,000,000 10,000,000 5,000,000
Blaylock & Partners,
L.P. .................. 2,475,000 4,950,000 4,950,000 2,475,000
Muriel Siebert & Co.,
Inc. .................. 2,475,000 4,950,000 4,950,000 2,475,000
------------ -------------- -------------- ------------
Total................. $500,000,000 $1,000,000,000 $1,000,000,000 $500,000,000
============ ============== ============== ============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
to pay for and accept delivery of the Offered Securities are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all the Offered
Securities if any are taken.
The Underwriters initially propose to offer the Offered Securities directly
to the public at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at a price that represents a
concession not in excess of .200% of the principal amount in the case of the
Notes Due 2000, .375% of the principal amount in the case of the Notes Due
2002, .400% of the principal amount in the case of the Notes Due 2007 and
.500% of the principal amount in the case of the Debentures Due 2027. Each
Underwriter may allow, and such dealers may reallow, a concession to certain
other dealers not in excess of .125% of the principal amount in the case of
the Notes Due 2000, .200% of the principal amount in the case of the Notes Due
2002, .250% of the principal amount in the case of the Notes Due 2007 and
.250% of the principal amount in the case of the Debentures Due 2027. After
the initial offering of the Offered Securities, the offering price and other
selling terms may from time to time be varied by the Underwriters.
The Company does not intend to apply for listing of the Offered Securities
on any national securities exchange, but has been advised by the Underwriters
that they presently intend to make a market in the Offered Securities, as
permitted by applicable laws and regulations. The Underwriters are not
obligated, however, to make a market in the Offered Securities and any such
market making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of,
or the existence of trading markets for, the Offered Securities.
The Company and the Underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act of 1933.
S-17
<PAGE>
Each of the Underwriters and certain of their affiliates engage in
transactions with and perform services, including investment or commercial
banking services, for Raytheon and certain of its subsidiaries in the ordinary
course of business.
In order to facilitate the offering of the Offered Securities, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Offered Securities. Specifically, the Underwriters may
overallot in connection with the offering, creating a short position in the
Offered Securities for their own account. In addition, to cover overallotments
or to stabilize the price of the Offered Securities, the Underwriters may bid
for, and purchase, the Offered Securities in the open market. Finally, the
underwriting syndicate may reclaim selling concessions allowed to an
underwriter or a dealer for distributing the Offered Securities in the
offering, if the syndicate repurchases previously distributed Offered
Securities in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Offered Securities above independent
market levels. The Underwriters are not required to engage in these activities
and may end any of these activities at any time.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions. The distribution of the Offered Securities in Canada is
being made only on a private placement basis exempt from the requirement that
Raytheon prepare and file a prospectus with the securities regulatory
authorities in each province where trades of Offered Securities are effected.
Accordingly, any resale of the Offered Securities in Canada must be made in
accordance with applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made in accordance
with available statutory exemptions or pursuant to a discretionary exemption
granted by the applicable Canadian securities regulatory authority. Purchasers
who are Canadian residents are advised to seek legal advice prior to any
resale of the Offered Securities.
Representations of Purchasers. Each purchaser of Offered Securities in
Canada who receives a purchase confirmation will be deemed to represent to
Raytheon and the dealer from whom such purchase confirmation is received that
(i) such purchaser is entitled under applicable provincial securities laws to
purchase such Offered Securities without the benefit of a prospectus qualified
under such securities laws; (ii) where required by law, such purchaser is
purchasing as principal and not as agent; and (iii) such purchaser has
reviewed the text above under "Resale Restrictions."
Rights of Action (Ontario Purchasers). The Offered Securities are those of a
foreign issuer and Ontario purchasers will not receive the contractual right
of action prescribed by section 32 of the Regulation under the Securities Act
(Ontario). As a result, Ontario purchasers must rely on other remedies that
may be available, including common law rights of action for damages or
rescission or rights of action under the civil liability provisions of the
U.S. federal securities laws.
Enforcement of Legal Rights. All of Raytheon's directors and officers as
well as the experts named herein may be located outside of Canada and, as a
result, it may not be possible for Canadian purchasers to effect service of
process within Canada upon Raytheon or such persons. All or a substantial
portion of the assets of Raytheon and such persons may be located outside of
Canada and, as a result, it may not be possible to satisfy a judgment against
Raytheon or such persons in Canada or to enforce a judgment obtained in
Canadian courts against Raytheon or such persons outside of Canada.
Notice to British Columbia Residents. A purchaser of Offered Securities to
whom the Securities Act (British Columbia) applies is advised that such
purchaser is required to file with the British Columbia Securities Commission
a report within ten days of the sale of any Offered Securities acquired by
such purchaser pursuant to this offering. Such report must be in the form
attached to British Columbia Securities Commission Blanket Order BOR #95/17, a
copy of which may be obtained from Raytheon. Only one such report must be
filed in respect of Offered Securities acquired on the same date and under the
same prospectus exemption.
Taxation and Eligibility For Investment. Canadian purchasers of Offered
Securities should consult their own legal and tax advisors with respect to the
tax consequences of an investment in the Offered Securities in their
particular circumstances and with respect to the eligibility of the Offered
Securities for investment by the purchaser under relevant Canadian
legislation.
S-18
<PAGE>
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following pro forma combined condensed financial statements have been
prepared by the Company's management from its historical consolidated
financial statements and from the historical financial statements of TI
Defense and Hughes Defense. The pro forma combined condensed statement of
earnings reflects adjustments as if the Acquisition and the Merger had
occurred on January 1, 1996. The pro forma combined condensed balanced sheet
reflects adjustments as if the Acquisition and the Merger had occurred on
March 30, 1997. The pro forma adjustments described in the accompanying notes
are based upon preliminary estimates and certain assumptions that management
of the Company believes are reasonable in such circumstances.
The pro forma combined condensed financial statements should be read in
conjunction with the historical consolidated financial statements of the
Company and the related notes thereto and with historical financial statements
of TI Defense and Hughes Defense and the related notes thereto, each of which
is incorporated by reference in the accompanying Prospectus.
The pro forma combined condensed financial statements are not necessarily
indicative of what the Company's actual financial position or results of
operations would have been if the Acquisition and the Merger had occurred on
the applicable date indicated. Moreover, they are not intended to be
indicative of future results of operations or financial position. The pro
forma combined condensed financial statements do not reflect the cost and
revenue synergies associated with such transactions, which the Company expects
to realize commencing in the first year of operation.
S-19
<PAGE>
PRO FORMA COMBINED CONDENSED
BALANCE SHEET AS OF MARCH 30, 1997
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL HISTORICAL RECLASSI- PRO FORMA PRO FORMA HUGHES PRO FORMA PRO FORMA
ASSETS RAYTHEON TI DEFENSE FICATIONS ADJUSTMENTS COMBINED DEFENSE ADJUSTMENTS COMBINED
------ ---------- ---------- --------- ----------- --------- ---------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets:
Cash & marketable
securities............ $ 134 $ $ $ $ 134 $ 57 $ (57)(3b) $ 134
Accounts receivable.... 844 251 (221)(2i) 874 690 1,564
Contracts in process... 2,817 436 (2i) (85)(2b,d) 3,168 1,664 (190)(3b) 4,642
Inventories............ 1,709 245 (215)(2i) 1,739 408 2,147
Other.................. 422 2 424 321 745
------- ---- ----- ------ ------- ------ ------- -------
Total current assets... 5,926 498 (85) 6,339 3,140 (247) 9,232
Property, plant and
equipment.............. 1,853 315 2,168 1,107 9 (3b) 3,284
Net cost in excess of
net assets acquired.... 3,051 43 (43)(2b) 5,778 2,970 (2,970)(3b) 13,263
2,727 (2b) 7,485 (3b)
Pension asset........... 1,109 (3b) 1,109
Other assets............ 666 1 66 (2b) 733 139 214 (3b) 1,086
------- ---- ----- ------ ------- ------ ------- -------
Total assets.......... $11,496 $857 $2,665 $15,018 $7,356 $ 5,600 $27,974
======= ==== ===== ====== ======= ====== ======= =======
LIABILITIES AND
STOCKHOLDERS' EQUITY
---------------------
Current liabilities:
Notes payable and
current portion of
long-term debt........ $ 2,403 $ $ 740 (2a) $ 3,143 $ 100 $ 2,310 (3a,j) $ 5,553
Advance payments....... 414 414 388 802
Accounts payable....... 1,165 215 1,380 298 1,678
Other.................. 965 53 78 (2b) 1,096 882 547 (3b) 2,525
------- ---- ----- ------ ------- ------ ------- -------
Total current
liabilities........... 4,947 268 818 6,033 1,668 $ 2,857 $10,558
Long-term debt and
capitalized leases..... 1,499 2,250 (2a) 3,749 31 2,130 (3a,j) 5,910
Other................... 333 186 519 305 900 (3b) 1,724
Stockholders' equity:
Common stock at par.... 236 236 103 (3a) 339
Additional paid-in
capital and other
adjustments........... 285 285 4,962 (3a,j) 5,247
Retained earnings...... 4,196 403 (403) 4,196 5,352 (5,352)(3b) 4,196
------- ---- ----- ------ ------- ------ ------- -------
Total stockholders'
equity................ 4,717 403 (403) 4,717 5,352 (287) 9,782
------- ---- ----- ------ ------- ------ ------- -------
Total liabilities and
stockholders' equity. $11,496 $857 $2,665 $15,018 $7,356 $ 5,600 $27,974
======= ==== ===== ====== ======= ====== ======= =======
</TABLE>
See accompanying notes.
S-20
<PAGE>
PRO FORMA COMBINED CONDENSED
STATEMENT OF EARNINGS
FOR THE THREE MONTHS ENDED MARCH 30, 1997
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL
HISTORICAL TI PRO FORMA PRO FORMA HUGHES PRO FORMA PRO FORMA
RAYTHEON DEFENSE ADJUSTMENTS COMBINED DEFENSE ADJUSTMENTS COMBINED
---------- ---------- ----------- --------- ---------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $2,899 $400 $3,299 $1,674 $4,973
------ ---- ---- ------ ------ ---- ------
Cost of sales........... 2,221 309 $ (2)(2c) 2,537 1,377 $ (6)(3c) 3,924
(3)(2d) (24)(3d)
17 (2g) 47 (3g)
(5)(2e) (7)(3c)
Amortization of push-
down goodwill.......... 25 (25)(3c) 0
Administration and
selling expenses....... 260 28 288 91 379
Research and development
expenses............... 79 18 97 35 132
Special charges......... 0 0 0 0
------ ---- ---- ------ ------ ---- ------
Operating income....... 339 45 (7) 377 146 15 538
Interest expense........ 69 69 25 (25)(3i) 69
Interest income......... (6) (6) (6)
Acquisition interest
expense................ 50 (2f) 50 75 (3f) 125
Other (income) expense.. (2) 1 (1) (5) (6)
------ ---- ---- ------ ------ ---- ------
Income before tax...... 278 44 (57) 265 126 (35) 356
Federal and foreign
income taxes........... 95 17 (20)(2h) 92 54 (6)(3h) 140
------ ---- ---- ------ ------ ---- ------
Net income............. $ 183 $ 27 $(37) $ 173 $ 72 $(29) $ 216
====== ==== ==== ====== ====== ==== ======
</TABLE>
See accompanying notes.
S-21
<PAGE>
PRO FORMA COMBINED CONDENSED
STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL HISTORICAL PRO FORMA PRO FORMA HUGHES PRO FORMA PRO FORMA
RAYTHEON TI DEFENSE ADJUSTMENTS COMBINED DEFENSE ADJUSTMENTS COMBINED
---------- ---------- ----------- --------- ---------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $12,331 $1,800 $14,131 $6,383 $20,514
------- ------ ----- ------- ------ ----- -------
Cost of sales........... 9,755 1,415 $ (6)(2c) 11,169 5,216 $ (18)(3c) 16,430
(12)(2d) (95)(3d)
69 (2g) 187 (3g)
(52)(2e) (29)(3e)
Amortization of push-
down goodwill.......... 101 (101)(3c) 0
Administration and
selling expenses....... 1,021 129 1,150 301 1,451
Research and development
expenses............... 323 78 401 192 593
Special charges......... 34 0 34 34
------- ------ ----- ------- ------ ----- -------
Operating income....... 1,198 178 1 1,377 573 56 2,006
======= ====== ===== ======= ====== ===== =======
Interest expense........ 256 256 92 (92)(3i) 256
Interest income......... (102) (102) (102)
Acquisition interest
expense................ 198 (2f) 198 300 (3f) 498
Other (income)/expense.. (40) 3 (37) (9) (46)
------- ------ ----- ------- ------ ----- -------
Income before tax....... 1,084 175 (197) 1,062 490 (152) 1,400
======= ====== ===== ======= ====== ===== =======
Federal and foreign
income taxes........... 322 66 (69)(2h) 319 209 (29)(3h) 499
------- ------ ----- ------- ------ ----- -------
Net income............. $ 762 $ 109 $(128) $ 743 $ 281 $(123) $ 901
======= ====== ===== ======= ====== ===== =======
</TABLE>
See accompanying notes.
S-22
<PAGE>
NOTES TO PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying pro forma combined condensed statements of earnings present
the historical results of operations of the Company, TI Defense and Hughes
Defense for the year ended December 31, 1996 and for the three months ended
March 30, 1997, with pro forma adjustments as if the Acquisition and the
Merger had taken place on January 1, 1996. The pro forma combined condensed
balance sheet presents the historical balance sheets of the Company, TI
Defense and Hughes Defense as of March 30, 1997, with pro forma adjustments as
if the Acquisition and the Merger had been consummated as of March 30, 1997,
in transactions accounted for as purchases in accordance with generally
accepted accounting principles.
Certain reclassifications have been made to the historical financial
statements of the Company, TI Defense and Hughes Defense to conform to the pro
forma combined condensed financial statement presentation on a consistent
basis.
2. PRO FORMA ADJUSTMENTS--TI DEFENSE
The following adjustments give pro forma effect to the Acquisition (in
millions):
<TABLE>
<C> <S> <C>
(a) To record the exchange consideration at closing:
Purchase price........................................... $2,950
======
(Assumed financing of $740 variable rate short-term
borrowings and $2,250 fixed rate medium- and long-term
borrowings at an aggregate interest rate of 6.31%
including acquisition costs of $40)
(b) To adjust the assets and liabilities to their estimated
fair values:
Net assets of TI Defense at March 30, 1997............... $ 403
Contracts in process valuation adjustments............... (85)
Provision for the estimated exit costs of integrating
acquired operations...................................... (78)
Deferred tax benefits.................................... 66
Costs in excess of net assets of acquired business....... 2,727
Acquisition costs........................................ (40)
Elimination of TI Defense goodwill....................... (43)
------
$2,950
======
</TABLE>
(c) Adjustment to eliminate the amortization of intangible assets of TI
Defense which would not have been incurred if the Acquisition had
occurred on January 1, 1996.
(d) Adjustment to reflect the effect on 1996 and 1997 results relating
to a net reduction of accumulated contract costs as an allowance
for the Company's normal profit on its efforts to complete such
contracts, and other contract valuation adjustments.
(e) Elimination of $32 of non-recurring employee related costs and $20
of non-recurring corporate allocations from the parent of TI
Defense as a result of the Acquisition for the year ended December
31, 1996 and $5 of non-recurring corporate allocations for the
three months ending March 30, 1997.
(f) Adjustments which represent additional estimated interest expense
resulting from the use of borrowings to finance the Acquisition and
incremental interest on Raytheon's pre-Acquisition variable rate
borrowings to reflect the change in credit rating as a result of
the Acquisition.
(g) The amortization of excess of costs over acquired net assets over
an estimated life of 40 years. Such amortization expense is subject
to possible adjustment resulting from the completion of the
valuation analyses. The Company expects that any subsequent
adjustment would not materially affect the combined pro forma
results.
S-23
<PAGE>
NOTES TO PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
(h) The estimated tax effect on the applicable pro forma adjustments.
(i) Reclassifications made to conform the TI Defense historical
financial statements to the unaudited pro forma combined condensed
financial statement presentation.
3. PRO FORMA ADJUSTMENTS--HUGHES DEFENSE
The following adjustments give pro forma effect to the Merger (in millions):
<TABLE>
<C> <S> <C>
(a) To record the exchange consideration at closing:
Purchase price ($9,500 less acquired debt of $120)....... $9,380
======
(Assumed financing is based on the price per share of the
Company's stock at the announcement date of the merger:
Equity--103 million shares at assumed market value of
$49.17 totals $5,065
Debt--$4,435 less $120 of debt assumed plus acquisition
costs of $125 totals $4,440 to be financed with a
combination of variable rate short-term borrowings of
$2,310 and fixed rate medium- and long-term borrowings of
$2,130 at an aggregate interest rate of 6.37%)
(b) To adjust the assets and liabilities to their estimated
fair values:
Net assets of Hughes Defense at March 30, 1997........... $5,352
Additional assets to be recorded in the Merger........... 57
Additional liabilities to be recorded in the Merger...... (105)
Cash not included in the Merger.......................... (57)
Contracts in process valuation adjustments............... (190)
Accrual for future lease cost in excess of fair market
value................................................ (254)
Provision for the estimated exit costs of integrating
acquired operations.................................. (495)
To include pension assets and reflect fair market value
less the projected benefit obligation................ 882
To include the liability for post-retirement benefits
other than pensions.................................. (366)
Deferred tax benefits.................................... 166
Costs in excess of net assets of acquired business....... 7,485
Acquisition costs........................................ (125)
Elimination of Hughes Defense goodwill................... (2,970)
------
$9,380
======
</TABLE>
(c) Adjustment to eliminate the amortization of intangible assets of
Hughes Defense which would not have been incurred if the Merger had
occurred on January 1, 1996.
(d) Adjustment to reflect the effect on 1996 and 1997 results relating
to a net reduction of accumulated contract costs as an allowance
for the Company's normal profit on its efforts to complete such
contracts.
(e) Elimination of $29 of non-recurring corporate allocations from the
parent of Hughes Defense as a result of the Merger for the year
ended December 31, 1996 and $7 for the three months ended March 30,
1997.
(f) Adjustments which represent additional estimated interest expense
resulting from the use of borrowings to finance the Merger and
incremental interest on Raytheon's pre-Merger variable rate
borrowings to reflect the change in credit rating as a result of
the Merger.
S-24
<PAGE>
NOTES TO PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
(g) The amortization of excess of costs over acquired net assets over
an estimated life of 40 years. Such amortization expense is subject
to possible adjustment resulting from the completion of the
valuation analyses. The Company expects that any subsequent
adjustment would not materially affect the combined pro forma
results.
(h) The estimated tax effect on the applicable pro forma adjustments.
(i) Elimination of Hughes Defense interest expense.
(j) The purchase price to be paid is subject to adjustment based on the
actual net assets at the time of the closing and the amount of debt
and equity to be paid is subject to adjustment based on the price
of the Company's stock at the closing.
S-25
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROSPECTUS
RAYTHEON COMPANY
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
---------------
Raytheon Company (the "Company" or "Raytheon") may offer from time to time,
in one or more series, (i) unsecured senior debt securities (the "Senior Debt
Securities"), (ii) unsecured subordinated debt securities (the "Subordinated
Debt Securities" and, together with the Senior Debt Securities, the "Debt
Securities"), (iii) warrants to purchase Debt Securities (the "Debt
Warrants"), (iv) shares of serial preferred stock, without par value, in one
or more series ("Preferred Stock"), (v) warrants to purchase shares of
Preferred Stock (the "Preferred Stock Warrants"), (vi) shares of common stock,
$1.00 par value per share ("Common Stock"), or (vii) warrants to purchase
shares of Common Stock (the "Common Stock Warrants"), in amounts, at prices
and on terms to be determined by market conditions at the time of offering.
The Debt Warrants, Preferred Stock Warrants and Common Stock Warrants are
referred to herein collectively as the "Securities Warrants." The Debt
Securities, Preferred Stock, Common Stock and Securities Warrants are referred
to herein collectively as the "Offered Securities."
The specific terms of the Offered Securities with respect to which this
Prospectus is being delivered will be set forth in a supplement to this
Prospectus (a "Prospectus Supplement"), together with the terms of the
offering and sale of the Offered Securities, the initial offering price and
the net proceeds to the Company from the sale thereof. The Prospectus
Supplement will include, with regard to the particular Offered Securities, the
following information: (i) in the case of Debt Securities, the specific
designation, aggregate principal amount, ranking, authorized denomination,
maturity, rate or method of calculation of interest and dates for payment
thereof, any terms for optional or mandatory redemption or payment of
additional amounts or any sinking fund provisions, any index or formula for
determining the amount of any principal, premium, or interest fund provisions,
the currency or currency unit in which principal, premium, or interest is
payable, whether the securities are issuable in registered form or in the form
of global securities and any provisions for the conversion or exchange of such
Debt Securities; (ii) in the case of Preferred Stock, the designation, number
of shares, liquidation preference per share, initial public offering price,
dividend rate (or method of calculation thereof), dates on which dividends
shall be payable and dates from which dividends shall accrue, any redemption
or sinking fund provisions and any conversion or exchange provisions; (iii) in
the case of Common Stock, the number of shares; (iv) in the case of Securities
Warrants, the duration, offering price, exercise price and detachability; and
(v) in the case of all Offered Securities, whether such Offered Securities
will be offered separately or as a unit with other Offered Securities. The
Prospectus Supplement also will contain information, where applicable, about
material United States federal income tax considerations relating to, and any
listing on a securities exchange of, the Offered Securities covered by such
Prospectus Supplement.
The Company's Common Stock is listed on the New York Stock Exchange, the
Chicago Stock Exchange and the Pacific Stock Exchange. Any Common Stock
offered hereby will be listed, subject to notice of issuance, on such
exchanges.
The Debt Securities of any series may be issued with Securities Warrants.
The Debt Securities may be Senior Debt Securities or Subordinated Debt
Securities. The Senior Debt Securities, when issued, will rank on a parity
with all the unsecured and unsubordinated indebtedness of the Company, and the
Subordinated Debt Securities, when issued, will be subordinated in right of
payment to all obligations of the Company to its other creditors, except
obligations ranking on a parity with or junior to the Subordinated Debt
Securities. See "Description of Debt Securities--Subordination of Subordinated
Debt Securities."
The Offered Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. See
"Plan of Distribution." If any agents of the Company, underwriters or dealers
are involved in the sale of any Offered Securities in respect of which this
Prospectus is being delivered, the names of such agents, underwriters or
dealers and any applicable commissions or discounts and the net proceeds to
the Company will be set forth in a Prospectus Supplement.
The Offered Securities may be issued in one or more series or issuances and
will be limited to $3,000,000,000 in aggregate public offering price (or its
equivalent, based on the applicable exchange rate, to the extent Debt
Securities are issued for one or more foreign currencies or currency units).
The Offered Securities may be sold for U.S. dollars, or any foreign currency
or currencies or currency units, and the principal of, any premium on, and any
interest on, the Debt Securities may be payable in U.S. dollars, or any
foreign currency or currencies or currency units.
The Offered Securities may be offered separately or as units with other
Offered Securities, in separate series in amounts, at prices and on terms to
be determined at or prior to the time of sale. The sale of other securities
under the Registration Statement of which this Prospectus forms a part or
under a Registration Statement to which this Prospectus relates will reduce
the amount of Offered Securities which may be sold hereunder.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
The date of this Prospectus is May 23, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information concerning the Company may be inspected and copies may be obtained
(at prescribed rates) at the Commission's Public Reference Section, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at the web site
(http://www.sec.gov) maintained by the Commission and at the Commission's
Regional Offices located at Seven World Trade Center, 13th Floor, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The Company's Common Stock is listed on the New York,
Chicago and Pacific Stock Exchanges, where reports, proxy statements and other
information concerning the Company can also be inspected. The offices of the
New York Stock Exchange are located at 20 Broad Street, New York, New York
10005.
The Company has filed a registration statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with the Commission with respect to the Offered Securities.
As permitted by the rules and regulations of the Commission, this Prospectus
omits certain information contained in the Registration Statement. For further
information with respect to the Company and the Offered Securities, reference
is hereby made to such Registration Statement, including the exhibits filed as
a part thereof. Statements contained in this Prospectus concerning the
provisions of certain documents filed with, or incorporated by reference in,
the Registration Statement are not necessarily complete, each such statement
being qualified in all respects by such reference. Copies of all or any part
of the Registration Statement, including the documents incorporated by
reference therein or exhibits thereto, may be obtained upon payment of the
prescribed rates at the offices of the Commission set forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company pursuant to
the Exchange Act are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(b) The Company's Current Reports on Form 8-K dated January 6, 1997 and
January 17, 1997; and
(c) The Company's Current Report on Form 8-K dated May 23, 1997, which
includes:
(i) The audited statement of assets to be acquired and liabilities to
be assumed of the Defense Business of Texas Instruments (as defined
below) as of December 31, 1996 and December 31, 1995 and the related
statements of income and cash flows for each of the three years in the
period ended December 31, 1996.
(ii) The audited combined balance sheet of the A&D Business of HEC
(as defined below) as of December 31, 1996 and December 31, 1995 and
the related combined statements of income and parent company's net
investment and combined statement of cash flows for each of the three
years in the period ended December 31, 1996.
(iii) Raytheon Company pro forma condensed combined statement of
financial condition at March 30, 1997, and pro forma condensed combined
statements of earnings for the twelve months ended December 31, 1996
and for the three months ended March 30, 1997, reflecting both the
Acquisition (as defined below) and the Merger (as defined below).
(iv) The unaudited statements of assets to be acquired and
liabilities to be assumed of the Defense Business of Texas Instruments
as of March 31, 1997 and the related statements of income and cash
flows for each of the three months ended March 31, 1997 and March 31,
1996.
2
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(v) The unaudited combined balance sheet of the A&D Business of HEC
as of March 31, 1997 and December 31, 1996, and the related combined
statement of income and Parent Company's net investment and combined
statement of cash flows for the three months ended March 31, 1997 and
March 31, 1996.
All documents filed by the Company pursuant to section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Offered Securities shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof
from the date of filing such documents. Any statement contained herein or in a
document, all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document or portion thereof which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, on written or oral
request of such person, a copy of any or all of the documents incorporated by
reference herein (other than exhibits to such documents unless such exhibits
are incorporated by reference into such documents). Such written requests
should be addressed to: Secretary, Raytheon Company, 141 Spring Street,
Lexington, Massachusetts 02173. Telephone requests may be directed to the
Secretary at (617) 862-6600.
THE COMPANY
Raytheon is an international, high technology company which operates in four
businesses: commercial and defense electronics, engineering and construction,
aircraft and major appliances. Historically, the Company's principal business
has been the design, manufacture and servicing of advanced electronic devices,
equipment and systems for government and commercial use, and Raytheon remains
a significant defense contractor in the United States.
In the past year, as a result of the increasing consolidation in the defense
industry, Raytheon has taken steps to strengthen its position as a competitive
defense contractor in the United States. Currently, Raytheon's defense
electronics business includes Raytheon Electronics Systems, which is a major
provider of ground-based air defense systems, air intercept missiles, ground-
based and shipboard radars, military communications systems, and naval combat
control, sonar and minehunting systems, as well as Raytheon E-Systems, which
is a leader in defense systems integration and provides reconnaissance and
surveillance, command, control, communications and intelligence systems, mass
data collection, interpretation and dissemination, specialized aircraft
modification services and ship-board and airborne countermeasures systems to a
wide variety of customers worldwide. In addition, during 1997 Raytheon plans
to consummate the Acquisition of the defense business of Texas Instruments
Incorporated ("Texas Instruments") and the Merger of Raytheon with the
aerospace and defense business (the "A&D Business") of Hughes Electronics
Corporation ("HEC").
Raytheon Engineers & Constructors is one of the largest engineering,
construction, and operations and maintenance organizations in the world.
Raytheon Aircraft is the world leader in general aviation, offering the most
extensive product line in the industry. Raytheon Appliances markets some of
the finest brand names in appliances, including Amana refrigerators, microwave
ovens, cooking surfaces and washer and dryers as well as Speed Queen, Huebsch
and UniMac commercial laundry equipment.
The address of the principal executive office of the Company is 141 Spring
Street, Lexington, Massachusetts 02173. The telephone number of the Company is
(617) 862-6600.
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THE ACQUISITION
On January 6, 1997, the Company entered into an Asset Purchase Agreement
with Texas Instruments, pursuant to which the Company agreed to purchase
substantially all of the assets of, and to assume substantially all of the
liabilities related to, the Defense Systems and Electronics Business (the
"Defense Business") of Texas Instruments (the "Acquisition") for an aggregate
amount of $2.875 billion in cash, subject to adjustment for certain changes in
the net assets of the Defense Business between September 30, 1996 and the
closing date of the purchase. In addition, the Company agreed to pay $75
million in respect of a certain related assignment and license of certain
related intellectual property. The Defense Business is a leader in precision-
guided munitions and Long Range Precision Strike programs, and has strong
positions in P-3 and S-3 ocean surveillance, F-22 airborne radars, and the
LANTIRN terrain-following radar. The Defense Business also produces electro-
optics products. The Acquisition is subject to Hart-Scott-Rodino antitrust
review and is expected to close in the second quarter of 1997.
THE MERGER
On January 16, 1997, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with HE Holdings, Inc. ("Hughes"), a Delaware
corporation and an indirect, wholly owned subsidiary of General Motors
Corporation, a Delaware corporation ("GM"), pursuant to which the Company
agreed to merge with and into Hughes (the "Merger"), with the combined company
to be called Raytheon Company.
Immediately prior to the consummation of the Merger, Hughes will be spun off
to the holders of GM's $1 2/3 and Class H common stocks in a transaction
intended to be tax-free to Hughes, GM and such holders. Immediately prior to
the spin-off, GM will consummate a series of transactions such that, at the
time of the spin-off, Hughes will consist of the A&D Business of HEC, the
parent corporation of Hughes. In connection with the spin-off and the Merger,
two classes of common stock will be created: Class A common stock, which will
be held by GM's $1 2/3 and Class H stockholders after the spin-off; and Class
B common stock.
Immediately following the spin-off of Hughes, Raytheon and Hughes will
consummate the Merger. In the Merger, Raytheon stockholders will receive Class
B common stock. The Class B common stock will represent approximately 70
percent of the equity of the combined company, and the Class A common stock
will represent the remaining approximately 30 percent of the equity.
The Merger Agreement provides that Hughes' total debt as of the time of the
Merger will be adjusted to reflect variations in the market price of Raytheon
stock, subject to specified limits. Prior to the Merger, the Company has
agreed that Hughes may borrow, and become liable to repay, up to approximately
$4.4 billion, which amount will be contributed by Hughes to a subsidiary of
Hughes the stock of which will then be distributed to GM and/or used by Hughes
to repay indebtedness to other GM subsidiaries. Accordingly, the proceeds of
such loan will not be assets of Hughes as of the time of the Merger. The
actual amount that may be so applied will be determined by subtracting from
$9.5 billion any other outstanding debt of Hughes as of the Effective Time and
the product of (x) the number of shares of Class A common stock to be issued
to GM's $1 2/3 and Class H stockholders (102,630,503 shares) and (y) the
average closing market price of the Common Stock during the 30-day period
ending on the fifth day prior to consummation of the Merger; provided that in
the event such average price is less than $44.42, it will be deemed to be
$44.42, and in the event such price is more than $54.29, it shall be deemed to
be $54.29. Based upon the midpoint of this range, the 102,630,503 shares to be
distributed to GM stockholders will have a value of approximately $5.1
billion. The balance of the $9.5 billion transaction value would then be made
up of approximately $4.4 billion in Hughes debt. In the event that the average
stock price is $44.42 or less, the amount of the Hughes debt would be
approximately $4.9 billion; in the event the average stock price is $54.29 or
more, the amount of Hughes debt would be approximately $3.9 billion. Such debt
would become a liability of the combined company following the Merger.
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The transaction is subject to, among other things, approval by Raytheon's
stockholders, certain regulatory approvals (including Hart-Scott-Rodino
antitrust review), approval of the spin-off and related transactions by the
holders of GM's $1 2/3 and Class H common stocks, and the receipt by GM of
rulings from the Internal Revenue Service relating to certain U.S. federal
income tax consequences of the transaction.
The A&D Business has approximately 40,000 employees, principally in the
states of California, Arizona, Indiana, Texas and Virginia. The A&D Business
is a major supplier of advanced defense electronics systems and services,
principally in naval systems, airborne and surface radars, air intercept
missiles and training simulators and services. The A&D Business also supplies
air traffic control systems to the U.S. Federal Aviation Administration and to
foreign governments, and is active in the fields of global positioning systems
and infrared/electro-optics.
The A&D Business is also the provider of tactical communications and
military radios, including the U.S. Army's Tactical Command and Control
System, AFATADS (Advanced Field Artillery Tactical Data Systems) and a wide
array of tactical radios. The A&D Business also provides trainers and
simulators for helicoptor and fixed-wing aircraft.
USE OF PROCEEDS
Unless otherwise provided in the applicable Prospectus Supplement, the net
proceeds from the sale of the Offered Securities will be used by the Company
to finance the Acquisition, including by refinancing commercial paper
borrowings and/or bank borrowings, with various maturities and bearing
interest at various rates, that may be incurred to finance the Acquisition or
other capital expenditures and working capital requirements and for other
general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of earnings
to fixed charges for each of the Company's fiscal years 1996, 1995, 1994, 1993
and 1992:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
4.6 6.0 12.0 18.1 11.9
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
consist of net earnings, taxes on income and fixed charges (less capitalized
interest) and fixed charges consist of interest expense, amortization of debt
discount and expense, the portion of rents representative of an interest
factor and capitalized interest.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture, dated as of
July 3, 1995 (the "Senior Indenture"), between the Company and The Bank of New
York, as trustee. The Subordinated Debt Securities are to be issued under a
second Indenture, dated as of July 3, 1995 (the "Subordinated Indenture"),
also between the Company and The Bank of New York, as trustee. Copies of the
Senior Indenture and the Subordinated Indenture have been filed with the
Commission and are incorporated by reference as exhibits to the Registration
Statement. The Senior Indenture and the Subordinated Indenture are sometimes
referred to collectively as the "Indentures." The Bank of New York is
hereinafter referred to as the "Senior Debt Trustee" when referring to it in
its capacity as trustee under the Senior Indenture, as the "Subordinated Debt
Trustee" when referring to it in its capacity as trustee under the
Subordinated Indenture, and as the "Debt Trustee" when referring to it in its
capacity as trustee under both of the Indentures. The following summaries of
certain provisions of the Senior Debt Securities, the Subordinated Debt
Securities and the Indentures do not purport to be complete and are
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<PAGE>
subject to and are qualified in their entirety by reference to all the
provisions of the Indenture applicable to a particular series of Debt
Securities (the "Applicable Indenture"), including the definitions therein of
certain terms. Wherever particular Sections, Articles or defined terms of the
Applicable Indenture are referred to, it is intended that such Sections,
Articles or defined terms shall be incorporated herein by reference. Article
and Section references used herein are references to the Applicable Indenture.
Capitalized terms not otherwise defined herein shall have the meaning given in
the Applicable Indenture.
The following sets forth certain general terms and provisions of the Debt
Securities offered hereby. The particular terms of the Debt Securities offered
by any Prospectus Supplement (the "Offered Debt Securities") will be described
in the Prospectus Supplement relating to such Offered Debt Securities (the
"Applicable Prospectus Supplement").
GENERAL
The Indentures do not limit the amount of Debt Securities that may be issued
thereunder and provide that Debt Securities may be issued thereunder from time
to time in one or more series. The Debt Securities will be unsecured
obligations of the Company.
Unless otherwise indicated in the Applicable Prospectus Supplement,
principal of, premium, if any, and interest on the Debt Securities will be
payable, and the transfer of Debt Securities will be registrable, at the
office or agency of the Company in each Place of Payment maintained by the
Company and at any other office or agency maintained by the Company for such
purpose, except that, at the option of the Company, interest may be paid by
mailing a check to the address of the Person entitled thereto as it appears on
the register for the Debt Securities (Sections 301, 305, 307 and 1002). The
Debt Securities will be issued only in fully registered form without coupons
and, unless otherwise indicated in the Applicable Prospectus Supplement, in
denominations of $1,000 or integral multiples thereof (Section 302). No
service charge will be made for any registration of transfer or exchange of
the Debt Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge imposed in connection therewith
(Section 305).
The Applicable Prospectus Supplement will describe the following terms of
the Offered Debt Securities: (i) the title of the Offered Debt Securities;
(ii) whether the Offered Debt Securities are Senior Debt Securities or
Subordinated Debt Securities; (iii) any limit on the aggregate principal
amount of the Offered Debt Securities; (iv) the Person to whom any interest on
the Offered Debt Securities is payable if other than the Person in whose name
any such Offered Debt Securities are registered; (v) the date or dates on
which the principal of the Offered Debt Securities will mature; (vi) the rate
or rates per annum (which may be fixed or variable) at which the Offered Debt
Securities will bear interest, if any, and the date or dates from which such
interest, if any, will accrue; (vii) the dates on which such interest, if any,
on the Offered Debt Securities will be payable and the Regular Record Dates
for such Interest Payment Dates; (viii) the place or places where the
principal of and any premium and interest on the Offered Debt Securities shall
be payable; (ix) any mandatory or optional sinking funds or analogous
provisions; (x) the date, if any, after which and the price or prices at which
the Offered Debt Securities may, pursuant to any optional or mandatory
redemption provisions, be redeemed and the other detailed terms and provisions
of any such optional or mandatory redemption provision; (xi) the obligation of
the Company, if any, to redeem or repurchase the Offered Debt Securities at
the option of the Holder; (xii) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which the Offered Debt
Securities shall be issuable; (xiii) if other than the principal amount
thereof, the portion of the principal amount of the Offered Debt Securities
that will be payable upon the declaration of acceleration of the Maturity
thereof; (xiv) the currency of payment of principal of and any premium and
interest on the Offered Debt Securities and, if other than United States
currency, the manner of determining the equivalent thereof in United States
currency for any purpose; (xv) any index used to determine the amount of
payment of principal of, and any premium and interest on, the Offered Debt
Securities; (xvi) if the Offered Debt Securities will be issuable only in the
form of a Global Security, the Depositary or its nominee with respect to the
Offered Debt Securities and the circumstances under which the Global Security
may be registered for transfer or exchange in the name of a
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Person other than the Depositary or its nominee; (xvii) the applicability, if
any, of the provisions described under "Defeasance and Covenant Defeasance";
(xviii) whether the Debt Securities are convertible into any other securities
and the terms and conditions of such convertibility; (xix) any additional
Event of Default, and in the case of any Offered Debt Securities that are
Subordinated Debt Securities, any additional Event of Default that would
result in the acceleration of the maturity thereof; and (xx) any other terms
of the Offered Debt Securities (Section 301).
Both Senior Debt Securities and Subordinated Debt Securities may be issued
as Original Issue Discount Debt Securities to be offered and sold at a
substantial discount below their stated principal amount. "Original Issue
Discount Debt Security" means any Debt Security which provides for an amount
less than the principal amount thereof to be due and payable upon the
declaration of acceleration of the Maturity thereof upon the occurrence of an
Event of Default and the continuation thereof (Section 101).
The Applicable Prospectus Supplement will also describe any material United
States federal income tax consequences or other special considerations
applicable to the series of Debt Securities to which such Prospectus
Supplement relates, including those applicable to (i) Debt Securities with
respect to which payments of principal, premium, or interest are determined
with reference to an index or formula (including changes in prices of
particular securities, currencies, or commodities), (ii) Debt Securities with
respect to which principal, premium, or interest is payable in a foreign or
composite currency, (iii) Original Issue Discount Debt Securities, and (iv)
variable rate Debt Securities that are exchangeable for fixed rate Debt
Securities.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Applicable Prospectus Supplement, the
following provisions will apply to the Subordinated Debt Securities.
The payment of the principal of, premium, if any, and interest on the
Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness (as defined below) (Section
1301). Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency or
similar proceedings of the Company, the holders of all Senior Indebtedness
will be entitled to receive payment in full of all amounts due or to become
due thereon before the Holders of the Subordinated Debt Securities will be
entitled to receive any payment in respect of the principal of, premium, if
any, or interest on the Subordinated Debt Securities (Section 1302). In the
event of the acceleration of the Maturity of any Subordinated Debt Securities
of any series, the holders of all Senior Indebtedness will be entitled to
receive payment in full of all amounts due or to become due thereon before the
Holders of the Subordinated Debt Securities will be entitled to receive any
payment of the principal of, premium, if any, or interest on the Subordinated
Debt Securities of such series or on account of the purchase or other
acquisition of Subordinated Debt Securities of such series (Section 1303).
Accordingly, in case of such an acceleration, all Senior Indebtedness would
have to be repaid before any payment could be made in respect of the
Subordinated Debt Securities. No payments on account of principal, premium, if
any, or interest in respect of the Subordinated Debt Securities or on account
of the purchase or other acquisition of Subordinated Debt Securities may be
made if there shall have occurred and be continuing a default in any payment
with respect to any Senior Indebtedness, or an Event of Default with respect
to any Senior Indebtedness permitting the holders thereof to accelerate the
maturity thereof, or if any judicial proceeding shall be pending with respect
to any such default (Section 1304).
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Indebtedness
or the Subordinated Debt Securities may recover less, ratably, than holders of
Senior Indebtedness and may recover more, ratably, than Holders of the
Subordinated Debt Securities.
"Senior Indebtedness" is defined in the Subordinated Indenture to mean the
principal of, and premium, if any, and interest on (i) all indebtedness of the
Company for money borrowed, other than the Subordinated Debt Securities, and
any other indebtedness of the Company represented by a note, bond, debenture
or other similar
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evidence of indebtedness (including indebtedness of others guaranteed by the
Company), in each case whether outstanding on the date of execution of the
Subordinated Indenture or thereafter created, incurred or assumed and (ii) any
amendments, renewals, extensions, modifications and refundings of any such
indebtedness, unless in any case in the instrument creating or evidencing any
such indebtedness or pursuant to which it is outstanding it is provided that
such indebtedness is not superior in right of payment to the Subordinated Debt
Securities. For the purposes of this definition, "indebtedness for money
borrowed" is defined as (A) any obligation of, or any obligation guaranteed
by, the Company for the repayment of borrowed money, whether or not evidenced
by bonds, debentures, notes or other written instruments, (B) any deferred
payment obligation of, or any such obligation guaranteed by, the Company for
the payment of the purchase price of property or assets evidenced by a note or
similar instrument, and (C) any obligation of, or any such obligation
guaranteed by, the Company for the payment of rent or other amounts under a
lease of property or assets if such obligation is required to be classified
and accounted for as a capitalized lease on the balance sheet of the Company
under generally accepted accounting principles (Section 101).
The Subordinated Indenture will not limit the amount of other indebtedness,
including Senior Indebtedness, that may be issued by the Company or any of its
Subsidiaries.
EVENTS OF DEFAULT
The Senior Indenture (with respect to any series of Senior Debt Securities
then Outstanding) and, unless otherwise provided in the Applicable Prospectus
Supplement, the Subordinated Indenture (with respect to any series of
Subordinated Debt Securities then Outstanding), define an Event of Default as
any one of the following events: (i) default in the payment of any interest on
any Debt Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 days (in the case of the
Subordinated Indenture, whether or not payment is prohibited by the
subordination provisions); (ii) default in the payment of the principal of, or
premium, if any, on any Debt Security of that series at its Maturity (in the
case of the Subordinated Indenture, whether or not payment is prohibited by
the subordination provisions); (iii) failure to deposit any sinking fund
payment when and as due by the terms of a Debt Security of that series (in the
case of the Subordinated Indenture, whether or not payment is prohibited by
the subordination provisions); (iv) failure to perform any other covenants or
agreements of the Company in the Applicable Indenture (other than covenants or
agreements included in the Applicable Indenture solely for the benefit of a
series of Debt Securities thereunder other than that series) and continuance
of such default for a period of 60 days after either the Debt Trustee or the
Holders of at least 25% of the principal amount of the Outstanding Debt
Securities of that series have given written notice specifying such failure as
provided in the Applicable Indenture; (v) certain events in bankruptcy,
insolvency or reorganization of the Company; and (vi) any other Event of
Default provided with respect to Debt Securities of that series (Section 501).
If an Event of Default occurs with respect to Debt Securities of any series,
the Debt Trustee shall give the Holders of Debt Securities of such series
notice of such default, provided, however, that in the case of a default
described in (iv) above, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof (Section 602).
If an Event of Default with respect to the Senior Debt Securities of any
series at the time Outstanding occurs and is continuing, either the Debt
Trustee or the Holders of at least 25% of the aggregate principal amount of
the Outstanding Debt Securities of that series may declare the principal
amount (or, if the Debt Securities of that series are Original Issue Discount
Debt Securities, such portion of the principal amount as may be specified in
the terms thereof) of all the Senior Debt Securities of that series to be due
and payable immediately. Payment of the principal of the Subordinated Debt
Securities may be accelerated only in the case of certain events of
bankruptcy, insolvency or reorganization of the Company. The Debt Trustee and
the Holders will not be entitled to accelerate the maturity of the
Subordinated Debt Securities upon the occurrence of any of the Events of
Default described above except for those described in clause (v) (i.e.,
certain events in bankruptcy, insolvency or reorganization of the Company).
Accordingly, there is no right of acceleration in the case of a default in the
performance of any other covenant with respect to the Subordinated Debt
Securities, including the payment of interest or principal. At any time after
a declaration of acceleration with respect to Debt Securities of any series
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<PAGE>
has been made, but before a judgment or decree based on acceleration has been
obtained, the Holders of a majority of the aggregate principal amount of
Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration (Section 502).
The Indentures provide that, subject to the duty of the Debt Trustee during
default to act with the required standard of care, the Debt Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such
Holders shall have offered to the Debt Trustee reasonable security or
indemnity (Section 603). Subject to such provisions for the indemnification of
the Debt Trustee and to certain other conditions, the Holders of a majority of
the aggregate principal amount of the Outstanding Debt Securities of any
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Debt Trustee, or exercising any
trust or power conferred on the Debt Trustee, with respect to the Debt
Securities of that series (Section 512).
No Holder of any series of Debt Securities will have any right to institute
any proceeding with respect to the Applicable Indenture or for any remedy
thereunder, unless: (i) such Holder previously has given to the Debt Trustee
under the Applicable Indenture written notice of a continuing Event of Default
with respect to Debt Securities of that series; (ii) the Holders of at least
25% of the aggregate principal amount of the Outstanding Debt Securities of
that series have made written request, and offered reasonable indemnity, to
the Debt Trustee to institute such proceeding as trustee; (iii) in the 60-day
period following receipt of a written notice from a Holder, the Debt Trustee
has not received from the Holders of a majority of the aggregate principal
amount of the Outstanding Debt Securities of that series a direction
inconsistent with such request; and (iv) the Debt Trustee shall have failed to
institute such proceeding within such 60-day period (Section 507). However,
such limitations do not apply to a suit instituted by a Holder of a Debt
Security for enforcement of payment of the principal of and premium, if any,
or interest on such Debt Security on or after the respective due dates
expressed in such Debt Security (Section 508).
The Company is required to furnish to the Debt Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance (Section 1005).
Any payment default on any Debt Security regardless of amount, where the
aggregate principal amount of the series of such Debt Security exceeds $25
million, or any other default that causes acceleration of any such Debt
Security, would give rise to a cross-default under the Company's $3 billion
Credit Agreement dated April 28, 1995. In certain circumstances, payment
defaults on Debt Securities may give rise to cross-defaults under guarantees
of the Company related to various receivables facilities of certain
subsidiaries of the Company.
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide that, if such provision is made applicable to the
Debt Securities of any series pursuant to Section 301 of the Applicable
Indenture (which will be indicated in the Applicable Prospectus Supplement),
the Company may elect either (i) to defease and be discharged from any and all
obligations in respect of such Debt Securities then outstanding (including, in
the case of Subordinated Debt Securities, the provisions described under
"Subordination of Subordinated Debt Securities" and except for certain
obligations to register the transfer of or exchange of such Debt Securities,
replace stolen, lost or mutilated Debt Securities, maintain paying agencies
and hold monies for payment in trust) ("defeasance") or (ii) to be released
from its obligations with respect to such Debt Securities concerning the
subordination provisions described under "Subordination of Subordinated Debt
Securities" and any other covenants applicable to such Debt Securities which
are determined pursuant to Section 301 of the Applicable Indenture to be
subject to covenant defeasance ("covenant defeasance"), and the occurrence of
an event described in clause (iv) under "Events of Default" above (insofar as
with respect to covenants subject to covenant defeasance) shall no longer be
an Event of Default, in the case of either (i) or (ii) if the Company
deposits, in trust, with the Debt Trustee money or U.S. Government
Obligations, which through the payment of interest thereon and principal
thereof in accordance with their terms will provide money, in an amount
sufficient, without reinvestment, to pay all the principal of and
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premium, if any, and interest on such Debt Securities on the dates such
payments are due (which may include one or more redemption dates designated by
the Company) and any mandatory sinking fund or analogous payments thereon in
accordance with the terms of such Debt Securities. Such a trust may only be
established if, among other things, (A) no Event of Default or event which
with the giving of notice or lapse of time, or both, would become an Event of
Default under the Applicable Indenture shall have occurred and be continuing
on the date of such deposit, (B) such deposit will not cause the Debt Trustee
to have any conflicting interest with respect to other securities of the
Company and (C) the Company shall have delivered an Opinion of Counsel to the
effect that the Holders will not recognize income, gain or loss for federal
income tax purposes (and, in the case of legal defeasance only, such Opinion
of Counsel must be based on a ruling of the Internal Revenue Service or other
change in applicable federal income tax law) as a result of such deposit or
defeasance and will be subject to federal income tax in the same manner as if
such defeasance had not occurred.
The Company may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its defeasance option, payment of such Debt
Securities may not be accelerated because of a subsequent Event of Default. If
the Company exercises its covenant defeasance option, payment of such Debt
Securities may not be accelerated by reference to a subsequent breach of any
of the covenants noted under clause (ii) in the preceding paragraph. In the
event the Company omits to comply with its remaining obligations with respect
to such Debt Securities under the Applicable Indenture after exercising its
covenant defeasance option and such Debt Securities are declared due and
payable because of the subsequent occurrence of any Event of Default, the
amount of money and U.S. Government Obligations on deposit with the Debt
Trustee may be insufficient to pay amounts due on the Debt Securities of such
series at the time of the acceleration resulting from such Event of Default.
However, the Company will remain liable in respect of such payments. (See
Article Thirteen and Article Fourteen of the Senior Indenture and the
Subordinated Indenture, respectively.)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Debt Trustee with the consent of the Holders of not less than a majority
of the aggregate principal amount of the Outstanding Debt Securities of all
series issued under the Indenture and affected by the modification or
amendments (voting as a single class); provided, however, that no such
modification or amendment may, without the consent of the Holders of all Debt
Securities affected thereby (i) change the stated Maturity of the principal
of, or any installment of principal of or interest on, any Debt Security; (ii)
reduce the principal amount of, or the premium, if any, or (except as
otherwise provided in the Applicable Prospectus Supplement) interest on, any
Debt Security (including in the case of an Original Issue Discount Debt
Security the amount payable upon acceleration of the Maturity thereof); (iii)
change the place or currency of payment of principal of, premium, if any, or
interest on any Debt Security; (iv) impair the right to institute suit for the
enforcement of any payment on any Debt Security on or after the Stated
Maturity thereof (or in the case of redemption, on or after the Redemption
Date); (v) in the case of the Subordinated Indenture, modify the subordination
provisions in a manner adverse to the Holders of the Subordinated Debt
Securities; or (vi) reduce the percentage of the principal amount of
Outstanding Debt Securities of any series, the consent of whose Holders is
required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults (Section 902).
The Holders of a majority of the aggregate principal amount of the Senior
Debt Securities or the Subordinated Debt Securities may, on behalf of all
Holders of the Senior Debt Securities or the Subordinated Debt Securities,
respectively, waive any past default under the Applicable Indenture, except a
default in the payment of principal, premium or interest or in the performance
of certain covenants (Section 513).
CERTAIN COVENANTS OF THE CORPORATION
Limitation on Liens. The Company may not, nor may it permit any Significant
Subsidiary (as defined below) to, create, incur, assume or permit to exist any
Lien (as defined below) on any property or asset (including any stock or other
securities of any Person, including any Significant Subsidiary), or on any
income or revenues
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or rights in respect of any thereof, unless the Debt Securities of any series
then or thereafter Outstanding shall be equally and ratably secured. This
restriction does not apply, however, to (i) Liens on property or assets of the
Company and its Subsidiaries existing on the date of the Indenture, provided
that such Liens shall secure only those obligations which they secure as of
the date of the Indenture; (ii) any Lien existing on any property or asset
prior to the acquisition thereof by the Company or any Subsidiary, provided
that (x) such Lien is not created in contemplation of or in connection with
such acquisition and (y) such Lien does not apply to any other property or
assets of the Company or any Subsidiary; (iii) Liens for taxes not yet due or
which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves, to the extent required by GAAP, have been
set aside; (iv) carriers', warehousemen's, mechanics', materialsmen's,
repairmen's or other like Liens arising in the ordinary course of business and
securing obligations that are not due and payable or which are being contested
in good faith by appropriate proceedings and with respect to which adequate
reserves, to the extent required by GAAP, have been set aside; (v) pledges and
deposits made in the ordinary course of business in compliance with workmen's
compensation, unemployment insurance and other social security laws or
regulations; (vi) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than capital leases), statutory
obligations, surety and appeal bonds, advance payment bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business; (vii) zoning restrictions, easements, rights-of-way, restrictions on
use of real property and other similar encumbrances incurred in the ordinary
course of business which, in the aggregate, are not substantial in amount and
do not materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Company or any of
its Subsidiaries; (viii) Liens upon any property acquired, constructed or
improved by the Company or any Subsidiary which are created or incurred within
360 days of such acquisition, construction or improvement to secure or provide
for the payment of any part of the purchase price of such property or the cost
of such construction or improvement, including carrying costs (but no other
amounts), provided that any such Lien shall not apply to any other property of
the Company or any Subsidiary; (ix) Liens on the property or assets of any
Subsidiary in favor of the Company; (x) extensions, renewals and replacements
of Liens referred to in paragraphs (i) through (ix) above, provided that any
such extension, renewal or replacement Lien shall be limited to the property
or assets covered by the Lien extended, renewed or replaced and that the
obligations secured by any such extension, renewal or replacement Lien shall
be in an amount not greater than the amount of the obligations secured by the
Lien extended, renewed or replaced; (xi) any Lien, of the type described in
clause (iii) of the definition below of the term "Lien," on securities imposed
pursuant to an agreement entered into for the sale or disposition of such
securities pending the closing of such sale or disposition; provided such sale
or disposition is otherwise permitted hereunder; (xii) Liens arising in
connection with any Permitted Receivables Program (to the extent the sale by
the Company or the applicable Subsidiary of its accounts receivable is deemed
to give rise to a Lien in favor of the purchaser thereof in such accounts
receivable or the proceeds thereof); (xiii) Liens on the capital stock or
assets of any Subsidiary that is not a Significant Subsidiary; and (xiv) Liens
to secure Indebtedness if, immediately after the grant thereof, the aggregate
amount of all Indebtedness secured by Liens that would not be permitted but
for this clause (xiv) does not exceed 15% of the Stockholders' Equity (as
defined below) as shown on the most recent consolidated balance sheet of the
Company filed with the Commission pursuant to the Exchange Act.
Limitation on Sale/Leaseback Transactions. Transactions involving any sale
and leaseback by the Company or any Significant Subsidiary of any Principal
Property (as defined below) are prohibited, unless the Company or any such
Significant Subsidiary, within 120 days after the effective date of the lease,
applies to the retirement of any Funded Debt (as defined below) an amount
equal to the greater of (i) the net proceeds of the sale of the property
leased or (ii) the fair market value of the property leased within 90 days
prior to the effective date of the lease. The amount to be so applied in
respect of any such transaction will be reduced, however, by the principal
amount of any Debt Securities surrendered to the Debt Trustee by the Company
for cancellation and by the principal amount of Funded Debt other than Debt
Securities, voluntarily retired by the Company, within 120 days after the
effective date of the lease, provided that no retirement may be effected by
payment on the final maturity date or pursuant to mandatory sinking fund or
prepayment provisions. This restriction does not apply, however, to the
Company or any Significant Subsidiary: (i) entering into any transaction not
involving a lease with a term of more than three (3) years; (ii) entering into
any transaction to the extent the Lien on any
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such property subject to such sale and leaseback would be permitted under the
covenant described above under "Limitation on Liens" or (iii) entering into
any transaction for the sale and leaseback of any property if such lease is
entered into within 180 days after the later of the acquisition, completion of
construction or commencement of operation of such property.
Leveraged Transactions. Except for the limitations on liens and
sale/leaseback transactions referred to above and on consolidations, mergers
or transfers of the Company's assets substantially as an entirety referred to
below, the Indentures and the terms of the Debt Securities do not contain any
covenants or other provisions designed to afford holders of any Debt
Securities protection in the event of a highly leveraged transaction involving
the Company.
Applicability of Covenants. Any series of Securities may provide that either
or both of the covenants described above shall not be applicable to the
Securities of such series (Section 301).
CERTAIN DEFINITIONS
Certain terms are defined in the Indenture and are used in this Prospectus
as follows:
"Funded Debt" means all Indebtedness that will mature, pursuant to a
mandatory sinking fund or prepayment provision or otherwise, and all
installments of Indebtedness that will fall due, more than one year from the
date of determination. In calculating the maturity of any Indebtedness, there
shall be included the term of any unexercised right of the debtor to renew or
extend such Indebtedness existing at the time of determination.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Indebtedness" of any Person shall mean, as at any date of determination,
all indebtedness (including capitalized lease obligations) of such Person and
its consolidated subsidiaries at such date that would be required to be
included as a liability on a consolidated balance sheet (excluding the
footnotes thereto) of such Person prepared in accordance with GAAP.
"Lien" means, with respect to any asset of any Person, (i) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest in or on
such asset, (ii) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (iii) in the case of securities that constitute
assets of such Person, any purchase option, call or similar right of a third
party with respect to such securities.
"Permitted Receivables Program" means any receivables securitization program
pursuant to which the Company or any of the Subsidiaries sells accounts
receivable to any non-Affiliate in a "true sale" transaction; provided,
however, that any related indebtedness incurred to finance the purchase of
such accounts receivable is not includible on the balance sheet (excluding the
footnotes thereto) of the Company or any Subsidiary in accordance with GAAP
and applicable regulations of the Commission.
"Principal Property" means (i) the Company's principal office building and
(ii) any manufacturing plant or principal research facility of the Company or
any Significant Subsidiary which is located within the United States of
America or Canada, except any such principal office building, plant or
facility which the Board of Directors by resolution declares is not of
material importance to the total business conducted by the Company and its
Subsidiaries as an entirety.
"Significant Subsidiary" means, at any time, any Subsidiary that would be a
"Significant Subsidiary" at such time, as such term is defined in Regulation
S-X promulgated by the Commission, as in effect on the date of the Indenture.
"Stockholders' Equity" means, at any date of determination, the
stockholders' equity at such date of the Company and its Subsidiaries, as
determined in accordance with GAAP.
"Subsidiary" means any corporation, partnership, limited liability company,
joint venture, trust or unincorporated organization more than 50% of the
outstanding voting interest of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries.
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CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into any other Person or
transfer or lease its assets substantially as an entirety to any Person unless
any successor or purchaser is a corporation organized under the laws of the
United States of America, any State or the District of Columbia, and any such
successor or purchaser expressly assumes the Company's obligations on the Debt
Securities under a supplemental indenture. The Debt Trustee may receive an
Opinion of Counsel as conclusive evidence of compliance with these provisions
(Article Eight).
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged for
or converted into shares of Common Stock, Preferred Stock or any other
security, including the conversion price or exchange ratio (or the method of
calculating the same), the conversion or exchange period (or the method of
determining the same), whether conversion or exchange will be mandatory or at
the option of the holder or the Company, provisions for adjustment of the
conversion price or the exchange ratio and provisions affecting conversion or
exchange in the event of the redemption of such Debt Securities, will be set
forth in the Prospectus Supplement relating thereto.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities that will be deposited with a Depositary or its nominee
identified in the Applicable Prospectus Supplement. In such a case, one or
more Global Securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal amount of
Outstanding Debt Securities of the series to be represented by such Global
Security or Securities. Unless and until it is exchanged in whole or in part
for Debt Securities in definitive registered form, a Global Security may not
be registered for transfer or exchange except as a whole by the Depositary for
such Global Security to a nominee for such Depositary and except in the
circumstances described in the Applicable Prospectus Supplement (Sections 204
and 305).
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in the Applicable Prospectus Supplement.
CONCERNING THE DEBT TRUSTEE
The Bank of New York is Debt Trustee under the Indentures. The Debt Trustee
performs services for the Company in the ordinary course of business.
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
general terms and provisions of the Preferred Stock to which any Prospectus
Supplement may relate (the "Applicable Prospectus Supplement"). Certain other
terms of any series of the Preferred Stock offered by the Applicable
Prospectus Supplement will be described in the Applicable Prospectus
Supplement. The description of certain provisions of the Preferred Stock set
forth below and in any Prospectus Supplement does not purport to be complete
and is subject to and qualified in its entirety by reference to the Company's
Restated Certificate of Incorporation, as amended to date (the "Restated
Certificate of Incorporation"), and the certificate of designation (a
"Certificate of Designation") relating to each series of the Preferred Stock
which will be filed with the Commission and incorporated by reference in the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such series of the Preferred Stock.
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GENERAL
The Company has authorized 3,000,000 shares of Serial Preferred Stock,
without par value, of which no shares are currently outstanding. The Board of
Directors has been authorized, subject to certain limitations set forth in the
Restated Certificate of Incorporation of the Company, to issue shares of
Serial Preferred Stock in one or more series, by resolution providing for the
issuance of such series, and to (i) fix the number of shares which will
constitute such series and the designation thereof, (ii) fix the stated value,
if any, of such series and the consideration for which shares of such series
may be issued, (iii) determine the voting rights of shares of such series,
(iv) determine the terms and conditions, if any, under which such series may
be redeemable, (v) determine whether shares of such series will be subject to
the operation of a retirement or sinking fund, (vi) determine the rate of any
dividends payable with respect to shares of such series and any preferences or
relations to dividends payable with respect to shares of other classes of the
Company's capital stock, (vii) determine the rights of shares of such series
upon the dissolution of the Company, (viii) determine if shares of such series
are convertible into or exchangeable for shares of another class or classes of
capital stock of the Company and the rates or prices at which shares of such
series are convertible or exchangeable, and (ix) determine such other
preferences and relative, participating, optional or other special rights and
qualifications of shares of such series as are not inconsistent with the terms
of the Restated Certificate of Incorporation. To the extent permitted by the
resolutions of the Board of Directors authorizing any such series of Preferred
Stock, a duly authorized committee of the Board of Directors may determine
certain of the designations described above which are made with respect to
such series.
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in the Applicable
Prospectus Supplement relating to the particular series of the Preferred Stock
offered thereby for the specific terms of such series.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. The rights of the holders of each series of
the Preferred Stock will be subordinate to those of the Company's general
creditors.
In the event that the Company issues any Preferred Stock pursuant to the
Applicable Prospectus Supplement, unless otherwise noted in the Applicable
Prospectus Supplement, State Street Bank and Trust Company of Boston,
Massachusetts will be the registrar and transfer agent for such Preferred
Stock.
DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to receive,
when and as declared by the Board of Directors of the Company, out of funds of
the Company legally available therefor, cash dividends on such dates and at
such rates as are set forth in, or as are determined by the method described
in, the Applicable Prospectus Supplement. Each such dividend will be payable
to the holders of record as they appear on the stock books of the Company on
such record dates, fixed by the Board of Directors of the Company, as
specified in the Applicable Prospectus Supplement.
Such dividends may be cumulative or noncumulative, as provided in the
Applicable Prospectus Supplement. If the Board of Directors of the Company
fails to declare a dividend payable on a dividend payment date on any series
of Preferred Stock for which dividends are noncumulative, then the right to
receive a dividend in respect of the dividend period ending on such dividend
payment date will be lost, and the Company will have no obligation to pay any
dividend for such period, whether or not dividends on such series are declared
payable on any future dividend payment dates. Dividends on the shares of each
series of Preferred Stock for which dividends are cumulative will accrue from
the date fixed by the Board of Directors. Unless dividends on all outstanding
shares of series of Preferred Stock having cumulative dividend rights have
been fully paid, no dividend (other than stock dividends) may be paid on the
Common Stock or any other class of stock ranking junior to the Preferred
Stock.
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LIQUIDATION PREFERENCES
Unless otherwise specified in the Applicable Prospectus Supplement, in the
event of any liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, the holders of each series of the Preferred Stock
will be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets is made to the
holders of Common Stock or any other shares of stock of the Company ranking
junior as to such distribution to such series of the Preferred Stock, the
amount (if any) set forth in the Applicable Prospectus Supplement, together
with any unpaid cumulative dividends. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable
with respect to the Preferred Stock of any series are not paid in full, the
holders of the Preferred Stock of such series and of any other series of equal
preference will share ratably in any such distribution of assets of the
Company in proportion to the full respective preferential amounts to which
they are entitled. After payment to the holders of the Preferred Stock of each
series that has a liquidation preference of the full preferential amounts of
the liquidating distribution to which they are entitled, the holders of each
such series of the Preferred Stock will be entitled to no further
participation in any distribution of assets by the Company. A consolidation,
merger or sale of substantially all of the assets of the Company would not be
considered a "liquidation" within the meaning of the foregoing provisions.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms,
at the time and at the redemption prices set forth in the Applicable
Prospectus Supplement. Shares of the Preferred Stock redeemed by the Company
will be restored to the status of authorized but unissued shares of Preferred
Stock of the Company.
CONVERSION AND EXCHANGE RIGHTS
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted into shares of Common Stock, or another series of
Preferred Stock, or any other security will be set forth in the Applicable
Prospectus Supplement. Such terms may include provisions for conversion,
either mandatory, at the option of the holder, or at the option of the
Company, in which case the number of shares of Common Stock, the shares of
another series of Preferred Stock or the amount of any other securities to be
received by the holders of Preferred Stock would be calculated as of a time
and in the manner stated in the Applicable Prospectus Supplement.
VOTING
So long as there are any shares of Preferred Stock outstanding, the Company
would be prohibited, without the affirmative vote of at least two-thirds of
the outstanding Preferred Stock, from (i) authorizing a new class of stock
which ranks senior in the payment of dividends or in liquidation preference to
the Preferred Stock, or (ii) altering materially the rights of the Preferred
Stock, unless in either case provision is made for the redemption of all
shares of Preferred Stock at the time outstanding. So long as there are any
shares of Preferred Stock outstanding, without the affirmative vote of at
least a majority of the outstanding Preferred Stock, the Company would be
prohibited from authorizing any class of stock which ranks on a parity as to
payment of dividends or liquidation preference with the Preferred Stock,
unless provision is made for the redemption of all shares of Preferred Stock
at the time outstanding. If accrued dividends on any series of Preferred Stock
have not been paid or set aside in an amount equivalent to six quarterly
dividends or three semiannual dividends, the holders of all outstanding shares
of all series of Preferred Stock, voting separately as a class, would be
entitled to increase the number of directors of the Company by two and elect
the two additional directors. These directors would serve until all accrued
and unpaid dividends on all outstanding shares of Preferred Stock had been
paid or set aside in full. Except for the specific voting rights summarized
above in this paragraph, the holders of any series of Preferred Stock would
have only such voting rights as may be authorized by the Board of Directors of
the Company in establishing the terms of that series.
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DESCRIPTION OF COMMON STOCK
COMMON STOCK
The Company's Restated Certificate of Incorporation authorizes the issuance
of 400,000,000 shares of Common Stock, par value $1.00 per share. As of April
27, 1997, there were 236,284,954 shares of Common Stock outstanding.
Subject to the rights of the holders of any Preferred Stock, each holder of
Common Stock on the applicable record date is entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available therefor, and, in the event of liquidation, to share pro rata in any
distribution of the Company's assets after payment of liabilities. Each holder
of Common Stock is entitled to one vote for each share held of record on the
applicable record date on all matters presented to a vote of stockholders. The
outstanding Common Stock is fully paid and non-assessable.
State Street Bank and Trust Company of Boston, Massachusetts is the
registrar and transfer agent for the Common Stock.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BY-LAWS
The following summary of certain provisions of the Company's Restated
Certificate of Incorporation and Amended and Restated By-Laws (the "Amended
and Restated By-Laws") does not purport to be complete and is subject to and
qualified in its entirety by reference to the Restated Certificate of
Incorporation and the Amended and Restated By-Laws which are incorporated by
reference as exhibits to the Registration Statement of which this Prospectus
is a part.
Fair Price Provisions. The Company's Restated Certificate of Incorporation
requires approval by holders of at least 75% of the Company's outstanding
voting stock for mergers and certain other corporate transactions ("Business
Transactions") that involve a beneficial owner of (or person that has
announced an intention to acquire) 10% or more of the voting stock of the
Company (a "Related Person"), unless (i) the transaction has been approved by
a majority of certain directors ("Continuing Directors") who constitute a
majority of the entire Board of Directors of the Company at such time or (ii)
certain fair price criteria and procedural requirements are satisfied. These
provisions of the Restated Certificate of Incorporation may be amended or
repealed only by the vote of the holders of 75% or more of the voting stock of
the Company, or by the vote of holders of a simple majority of the voting
stock of the Company if the Board of Directors is composed entirely of
Continuing Directors and unanimously approves the amendment or repeal.
A "Continuing Director" is any member of the Board of Directors who is not
an affiliate or associate of the Related Person involved in a particular
Business Transaction and was or becomes a director prior to the time that the
Related Person became a Related Person, or is elected or recommended for
election by the stockholders by a majority of the then Continuing Directors.
The fair price criteria require that in the event of a Business Transaction
in which cash or other consideration would be paid to the Company's
stockholders, (i) the consideration to be received by the stockholders be
either cash or the same type of consideration used by the Related Person to
acquire the largest portion of such Related Person's shares, and (ii) the fair
market value of such consideration to be received per share of Common Stock be
not less than the highest per share price paid by the Related Person in
acquiring any Common Stock of the Company within two years before becoming and
while a Related Person, or if higher the per share price on the date of first
public announcement of the Business Transaction.
The fair price criteria also require that the aggregate amount of cash and
fair market value of other consideration to be received by holders of shares
of voting stock other than Common Stock shall be the higher of: (i) the
highest per share price paid by the Related Person in acquiring such voting
stock within two years before becoming and while a Related Person, or if
higher the per share price on the date of first public announcement of the
Business Transaction, and (ii) the highest preferential liquidation amount per
share to which such voting shares are entitled.
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The procedural requirements would not be satisfied if, (i) after a Related
Person became a 10% voting stockholder, the Related Person acquired additional
shares of voting stock of the Company, other than pursuant to a pro rata stock
split or dividend; (ii) before consummation of the Business Transaction, the
Related Person shall have received the benefit of any financial assistance or
tax advantage provided by the Company not shared proportionately with all
other stockholders; (iii) before consummation of the Business Transaction, the
Related Person causes a material change in the Company's business, capital
structure or dividend rates or policy; or (iv) the proposed Business
Transaction shall not have been described in a proxy statement mailed to the
Company's stockholders no later than 30 days prior to the consummation of such
transaction, which proxy statement must prominently set forth any statements
any of the Continuing Directors choose to make with respect to the
advisability (or inadvisability) of the proposed Business Transaction and, if
deemed advisable by a majority of the Continuing Directors, the opinion of an
investment bank selected by a majority of the Continuing Directors as to the
fairness (or not) to the Company's stockholders of the proposed Business
Transaction.
Classification of Directors; Advance Notice of Nominations. The Company's
Restated Certificate of Incorporation and Amended and Restated By-Laws provide
that its Board of Directors shall be divided into three classes, each class
being as nearly equal in number as possible, and that at each annual meeting
of the Company's stockholders, the successors to the Directors whose terms
expire that year shall be elected for a term of three years. Within the limit
of not less than five nor more than 15 Directors, the number of Directors is
fixed by the Board of Directors. Newly created Directorships and any vacancies
on the Board of Directors are filled by a majority vote of the remaining
Directors then in office, even if less than a quorum. Directors may be removed
by the affirmative vote of the holders of a majority of the outstanding voting
shares of the Company, but only for cause.
Any stockholder intending to nominate a person for election as Director at a
meeting of stockholders may do so only if written notice of the stockholder's
intent to make such nomination, including certain related information
specified in the Amended and Restated By-Laws, is given to the Secretary of
the Company not later than 60 days or earlier than 90 days in advance of the
annual meeting at which the nomination is to be made (or in the case of a
special meeting, not later than the tenth day following the date on which
notice of that meeting is first given to stockholders).
CERTAIN ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW
The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of
the Company's outstanding voting stock) from engaging in a "business
combination" (as defined in Section 203) with the Company (or its majority-
owned subsidiaries) for three years following the time such person became an
interested stockholder unless: (i) before such person became an interested
stockholder, the Company's Board of Directors approved the transaction in
which the interested stockholder became an interested stockholder or approved
the business combination; (ii) upon consummation of the transaction that
resulted in the interested stockholder becoming an interested stockholder, the
interested stockholder owns at least 85% of the Company's voting stock
outstanding at the time the transaction commenced (excluding stock held by
directors who are also officers of the Company and by employee stock plans
that do not provide employees with the rights to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer); or (iii) at or following the transaction in which such person
became an interested stockholder, the business combination is approved by the
Company's Board of Directors and approved at a meeting of stockholders by the
affirmative vote of the holders of at least two-thirds of the Company's
outstanding voting stock not owned by the interested stockholder. Under
Section 203, the restrictions described above also do not apply to certain
business combinations proposed by an interested stockholder following the
earlier of the announcement or notification of one of certain extraordinary
transactions involving the Company and a Person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the Company's directors, if
such extraordinary transaction is approved or not opposed by a majority of the
directors who were directors prior to any person becoming an interested
stockholder during the previous three years or were recommended for election
or elected to succeed such directors by a majority of such directors.
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DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock or Common Stock. Securities Warrants may be issued
independently or together with Debt Securities or shares of Preferred Stock or
Common Stock offered by any Prospectus Supplement and may be attached to or
separate from such Debt Securities or shares of Preferred Stock or Common
Stock. Each series of Securities Warrants will be issued under a separate
warrant agreement (a "Securities Warrant Agreement") to be entered into
between the Company and State Street Bank and Trust Company of Boston,
Massachusetts or another bank or trust company, as warrant agent (the
"Securities Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of offered Securities Warrants. The
Securities Warrant Agent will act solely as an agent of the Company in
connection with the Securities Warrants and will not assume any obligation or
relationship of agency or trust for or with any holders of Securities Warrants
or beneficial owners of Securities Warrants. Copies of the forms of Securities
Warrant Agreements, including the forms of Securities Warrant Certificates
representing the Securities Warrants, are filed as exhibits to the
Registration Statement of which this Prospectus is a part. The following
summary of certain provisions of the Securities Warrants does not purport to
be complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Securities Warrant Agreements.
Reference is made to the Prospectus Supplement relating to the particular
issue of Securities Warrants offered thereby for the terms of such Securities
Warrants, including, where applicable: (i) the designation, aggregate
principal amount, currencies, denominations and terms of the series of Debt
Securities purchasable upon exercise of Securities Warrants to purchase Debt
Securities and the price at which such Debt Securities may be purchased upon
such exercise; (ii) the designation, number, stated value and terms
(including, without limitation, liquidation, dividend, conversion and voting
rights) of the series of Preferred Stock purchasable upon exercise of
Securities Warrants to purchase Preferred Stock and the price at which such
number of shares of Preferred Stock of such series may be purchased upon such
exercise; (iii) the number of shares of Common Stock purchasable upon the
exercise of Securities Warrants to purchase Common Stock and the price at
which such number of shares of Common Stock may be purchased upon such
exercise; (iv) the date on which the right to exercise such Securities
Warrants shall commence and the date (the "Expiration Date") on which such
right shall expire; (v) U.S. federal income tax consequences applicable to
such Securities Warrants; and (vi) any other terms of such Securities
Warrants. Securities Warrants for the purchase of Preferred Stock and Common
Stock will be offered and exercisable for U.S. dollars only. Securities
Warrants will be issued in registered form only. The exercise price for
Securities Warrants will be subject to adjustment in accordance with the
Applicable Prospectus Supplement.
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or such number of shares of Preferred
Stock or Common Stock, as the case may be, at such exercise price as shall in
each case be set forth in, or calculable from, the Prospectus Supplement
relating to the offered Securities Warrants, which exercise price may be
subject to adjustment upon the occurrence of certain events as set forth in
such Prospectus Supplement. After the close of business on the Expiration Date
(or such later date to which such Expiration Date may be extended by the
Company), unexercised Securities Warrants will become void. The place or
places where, and the manner in which, Securities Warrants may be exercised
shall be specified in the Prospectus Supplement relating to such Securities
Warrants.
Prior to the exercise of any Securities Warrants to purchase Debt
Securities, holders of such Securities Warrants will not have any of the
rights of holders of the Debt Securities purchasable upon such exercise,
including the right to receive payments of principal of, premium, if any, or
interest, if any, on the Debt Securities purchasable upon such exercise or to
enforce covenants in the Applicable Indenture. Prior to the exercise of any
Securities Warrants to purchase Preferred Stock or Common Stock, holders of
such Securities Warrants will not have any rights of holders of the Preferred
Stock or Common Stock purchasable upon such exercise, including the right to
receive payments of dividends, if any, on the Preferred Stock or Common Stock
purchasable upon such exercise or to exercise any applicable right to vote.
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PLAN OF DISTRIBUTION
The Company may sell the Offered Securities in or outside the United States
through underwriters or dealers, directly to one or more purchasers, or
through agents. The Prospectus Supplement with respect to the Offered
Securities will set forth the terms of the offering of the Offered Securities,
including the name or names of any underwriters, dealers or agents, the
purchase price of the Offered Securities and the proceeds to the Company from
such sale, any delayed delivery arrangements, any underwriting discounts and
other items constituting underwriters' compensation, the initial public
offering price, any discounts or concessions allowed or re-allowed or paid to
dealers, and any securities exchanges on which the Offered Securities may be
listed.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale. The Offered Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more firms acting as underwriters. The underwriter or
underwriters with respect to a particular underwritten offering of Offered
Securities will be named in the Prospectus Supplement relating to such
offering, and if an underwriting syndicate is used, the managing underwriter
or underwriters will be set forth on the cover of such Prospectus Supplement.
Unless otherwise set forth in the Prospectus Supplement relating thereto, the
obligations of the underwriters or agents to purchase the Offered Securities
will be subject to conditions precedent, and the underwriters will be
obligated to purchase all the Offered Securities if any are purchased. The
initial public offering price and any discounts or concessions allowed or re-
allowed or paid to dealers may be changed from time to time.
If dealers are used in the sale of Offered Securities with respect to which
this Prospectus is delivered, the Company will sell such Offered Securities to
the dealers as principals. The dealers may then resell such Offered Securities
to the public at varying prices to be determined by such dealers at the time
of resale. The names of the dealers and the terms of the transaction will be
set forth in the Prospectus Supplement relating thereto.
Offered Securities may be sold directly by the Company or through agents
designated by the Company from time to time at fixed prices, which may be
changed, or at varying prices determined at the time of sale. Any agent
involved in the offer or sale of the Offered Securities with respect to which
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement relating
thereto. Unless otherwise indicated in the Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its
appointment.
Offered Securities may be sold directly by the Company to institutional
investors or others, who may be deemed to be underwriters within the meaning
of the Securities Act with respect to any resale thereof. The terms of any
such sales will be described in the Applicable Prospectus Supplement.
In connection with the sale of the Offered Securities, underwriters or
agents may receive compensation from the Company or from purchasers of Offered
Securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters, agents and dealers participating in
the distribution of the Offered Securities may be deemed to be underwriters,
and any discounts or commissions received by them from the Company and any
profit on the resale of the Offered Securities by them may be deemed to be
underwriting discounts or commissions under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set
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forth in the Prospectus Supplement, and the Prospectus Supplement will set
forth the commission payable for solicitation of such contracts.
Agents, dealers and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that such agents, dealers, or
underwriters may be required to make with respect thereto. Agents, dealers,
and underwriters may be customers of, engage in transactions with or perform
services for the Company in the ordinary course of business.
Some or all of the Offered Securities may be new issues of securities with
no established trading market. Any underwriters to whom Offered Securities are
sold by the Company for public offering and sale may make a market in such
Offered Securities, but such underwriters will not be obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the liquidity of or the trading markets for any Offered
Securities.
Certain of the underwriters, dealers or agents and their affiliates may be
customers of, engage in transactions with and perform services for the Company
in the ordinary course of business.
VALIDITY OF OFFERED SECURITIES
The validity of the Offered Securities will be passed upon for the Company
by Thomas D. Hyde, Esq., Vice President and General Counsel of the Company,
and for any underwriters by Cravath, Swaine & Moore of New York City. As of
the date of this Prospectus, Thomas D. Hyde, Esq. holds 18,417 shares and
options to acquire 87,518 shares of Common Stock of the Company.
EXPERTS
The consolidated balance sheets of Raytheon Company as of December 31, 1996
and 1995 and the related statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996 and
the related financial statement schedule, incorporated by reference in this
Prospectus, have been incorporated herein in reliance on the reports of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing. The financial statements of
the Defense Business of Texas Instruments as of December 31, 1996 and 1995 and
for the three years ended December 31, 1996, incorporated by reference in this
Prospectus, have been incorporated herein in reliance on the reports of Ernst
& Young LLP, independent auditors, given on the authority of that firm as
experts in accounting and auditing. The financial statements of the A&D
Business of HEC as of December 31, 1996 and 1995 and for the three years ended
December 31, 1996, incorporated by reference in this Prospectus, have been
incorporated herein in reliance on the reports of Deloitte & Touche LLP,
independent auditors, given on the authority of that firm as experts in
accounting and auditing.
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